How's Business in Russia?

by JOHN BAKER WHITE

1

ON January 20, 1949, the Statistical Office of the U.S.S.R. Council of Ministers issued a statement on the progress made by Russian industry and agriculture in 1948, the third year of the present Five-Year Plan. It was broadcast by the Moscow radio the same day for Russian listeners and repeated in all foreign-language broadcasts. It claimed, as might have been expected, sensational advances in important fields of production, while admitting that some industries had not reached the planned level of output. The general claim was that industry as a whole had beaten the target figure by 6 per cent, as compared with 3 per cent in the three years 1946-1948.

The industries exceeding their estimated output included coal, oil, iron and steel, food, building materials, and light industry. The planned output was not attained in the case of automobiles, steam turbines, Diesel locomotives, certain types of machine tools, railway sleepers, and certain branches of agricultural engineering. Despite bad weather in the Volga area, and smaller productive acreage as a result of war damage, the cereal harvesl was only a little below the 1940 level, and yields per acre were above pre-war levels.

That is the general picture of the Gosplan report for 1948, but outside the Soviet Union few serious students of economics and Soviet affairs would be prepared to accept it on its face value. As leading Russian Communists have pointed out on several occasions, statistics are only valuable when they conform with the party line, which is another way of saying that they must be used to support the Politburo’s current directive. A major Kremlin task at the moment is to convince the Russian people and the Iron Curtain countries of the success of economic Sovietism.

To get an accurate picture of the state of Soviet industry one has to probe much deeper than the Gosplan report, to take a thousand and one items of information, piecing them together like a giant jigsaw puzzle, rejecting always the unreliable and undocumented story. That is how the picture given in this article has been built up—and it is one very different from that given in the Council of Ministers’ report. It indicates that in spite of considerable increases in production and substantial progress in repairing war damage, there are five serious and major weaknesses in Soviet industry today. They are: —

1. A very real production crisis in light industry — textiles, consumers’ goods, and furniture.

2. A waste of material that would appall any industry under capitalist management.

3. Faulty technical planning Leading to a widespread wastage of man-hours.

4. Bad coördination between the different industrial units making the component parts of locomotives, tractors, and other equipment.

5. A wages-produetion-prices system that must lead inevitably to the physical and mental exhaustion of the labor force, especially because forced labor forms an appreciable portion of it.

Though the men at the head of ihe Soviet economy may shut their eyes to the last-named factor — the exploitation of human labor in Russia is as old as the steppes — they are becoming increasingly aware of the others.

They are particularly concerned about the crisis in light industry because of its relation to the production drive. When the ruble was revalued, with consequent adjustments in prices and wages, the Soviet leaders realized that a great increase in the output of consumers’ goods would be necessary to maintain the incentive of the workers. ’I he average Soviet worker is no different at hearl from the British miner who refused to work more than three days a week because “there’s nowt to spend brass on” — ihe Yorkshire fashion of saying “no goods in the stores.” The Gosplan report claims that in 1948 the output of light industry was 6 per cent above the target figure. That may be so, but a considerable part of the output was unusable.

The crisis in light industry came to a head at the end of 1948, though the first indications were apparent in the spring. At the session of the Moscow Council of Workers Deputies held in December, there were bitter complaints about the bad quality of consumers’ goods.

Prosorov, the deputy chairman of the executive, said that a number of textile, light-industry, and woodworking factories had “failed to restore the pre-war variety of products” and that there were “many cases of poor quality.” He gave as an example the materials produced by the Peter Alekseev factory (which “remained like a dead weight in the shops”), the garments from Factory No. 3, and the footwear from the Kapranov factory. He said that in the first ten months of 1948, Moscow’s light industries had lost about 5 million rubles and the textile industry about 4 million rubles on account of bad quality and defective goods.

At the same meeting one of the deputies said that after an analysis of consumer demand 470 varieties had been withdrawn from production.

Cheprakov, the Soviet Minister for Light Industry, emphasized a significant point when he said that 20 per cent of the total light-industry output of the Soviet Union came from Moscow. He referred to “great shortcomings” and the “negligent attitude to consumers’ goods on the part of the managers of certain metallurgical enterprises.” Pravda of December 10, 1948, said it was an “absurd and ridiculous situation” that goods worth millions of rubles should remain in the stores because no one would buy them. The paper also warned the directors of the factories that if there was not an improvement they would “undoubtedly be reminded of the Soviet laws providing for the severe punishment of those responsible for poor-quality production.” They were reminded!

The editor of Pravda. and the speakers at the Council of Workers Deputies may have been aware that in October the question of faulty production had been referred for investigation to the Prosecutor’s Office of the MGB (Ministry of State Security). It worked swiftly and ruthlessly. On December 15 it made its report and stated the action it had taken. The following are the main items: —

Tobacco Factory, Saratov. Cigarettes found to contain dirt, stalk, and rubbish. Badly filled, often torn owing to faulty machinery. In six months this factory alone produced over 1.4 million packets of faulty and bad-quality cigarettes. Director V. K. Ovehinsky sentenced to seven years’ imprisonment; Chief Engineer P. V. Kireyev and Chief of Technical Control Department V. I. Podshivalin, five years each.

Mechanical Foundry Works, Leningrad. Systematic production of poor-quality goods. Chisels sent to other factories were found to be unusable. Adjustable spanners [monkey wrenches] sent out with immovable screws and loose heads. No proper precision tools or blueprints had been issued to the shops. Director V. B. Garibyan and Chief Engineer V. A. Glinchikov both sentenced to five years’ “deprivation of liberty.”

Sewing Factory of the Frunze District Industrial Combine, Moscow. Continuous output of men’s clothes that proved to be unwearablc. Director Tarachkov sentenced to five years’ imprisonment.

Coal Mine, No. 4 Pit, Katykovsky District, Stalin Province. Production of coal containing a high percentage of slate. Manager Anisimov sentenced to five years’ imprisonment.

Makeyevka Industrial Combine, Stalin Province. Out of 7770 cultivator wheels delivered to the Mariupol metal products factory, all save 217 were defective. Chief Engineer Chvdakov and Chief of the Technical Control Department Radchenko, each five years’ imprisonment.

This by no means completes the list. Investigations into the reasons for defective output are still taking place in many plants all over the Soviet Union, including the Kalibr precision tools factory at Chelyabinsk, the Karbo-Lemta textile plant at Noginsk, and the Avto-Detal car factory at Erivan.

Other plants in which there has been faulty production on a large scale are the “October Fifth” factory at Barnaul, which, in one consignment, sent out 16,000 meters of unusable cloth, and the Urb an footwear factory. Out of 2000 pairs of boots sent to Kiev in November, 450 pairs were un wearable. Also on the black list are the Peter Alekseyev and Osvobodzona Pratsa factories and Clothing factory No. 1. All are in the Moscow district and all produce woolen fabrics. Pravda on December 10 said that goods from these factories “lie on the shelves and nobody will buy them.”

2

THE output of defective goods is but one aspect of the crisis. Another feature is the failure of plants to reach t heir target. Factories under the conirol of the Minister of Transport Machine Building had, at the end of the year, production deficiencies including 90,000 metal spoons, 108,000 tons of aluminum vessels, 50 tons of locks, and 15,000 spades.

Trud of September 10, 1948, reported from the industrial town of Stalino: “We saw in the shops locally-made locks which do not lock, unpainled beds which have already rusted, and horrible iron goods of no use to anybody.” Of spoons and forks it said: “The quality is beneath criticism.”

Some factories which formerly made consumers’ goods as an ancillary to their major production have now ceased to produce them. These factories include the agricultural machinery plant at Orsk and the tractor and “Red October” factories in Stalingrad. This may be due to the fact that the consumers’ goods were produced from scrap metal and similar products.

Drastic steps are being taken by the Praesidium of the Supreme Council of the U.S.S.R. to deal with the crisis. They realize that faulty production is not to be found just in one area or group of enterprises, but all over the Soviet Union and over a very wide range of indust ries.

The Praesidium has decided to reorganize the whole control of the light industries in Russia. The former Ministry of Light Industry and the Ministry of the Textile Industry have been merged to form a single Ministry of Light Industry of the U.S.S.R., and this reorganization is to be carried out in the Union republics as well. The reorganization is to be under the personal supervision of Shvernik, the chairman of the Praesidium. Kosygin, the former Minister of Finance, has been appointed head of the new ministry.

The inquiries of t he Public Prosecutor have shown that in almost every case faulty production could be traced back to the managerial and technical control level. One of Kosygin’s first tasks will be to decide whether this is due to (a) passive resistance amounting to sabotage, (b) lack of training among managerial stall’s, or (c) the inability of even the best of staffs to produce good-qualily articles from lowquality raw materials when using bad machinery and indifferently trained labor. Managers who have dared to express an opinion at all say that the present crisis arises from indifferently trained labor.

There is concrete evidence of inefficiency over a much wider field. A leading article in Pravda of December 9, 1948, referred to difficulties in the limber industry and described them as “an intolerable situation.” It said that less than half the required transport personnel was working in the forests of the Vologda, Kostroma, and Kirov provinces; and that only hundreds of horse-drawn carts, instead of thousands, were in use in the Kalinin and Yaroslavl provinces. It made the general criticism that transport was not being properly used, and stated that only 50 per cent of the horses of the enterprises belonging to the Ministries of the Timber and Paper Industries wore working. Mechanized transport was said to be in an even worse state. Hundreds of tractors and a great number of trucks and engines were left idle.

Difficulties also arose over the harvesting of the cotton crop. A report dated November 18, 1948, said that “cotton deliveries are proceeding satisfactorily in some but not all areas. I here is a serious threat tluit the quality of the crop may be impaired and much of it lost owing to harvesting delays. Party leaders in the Uzbek, Kazakh, and Kirghiz republics are not taking the necessary measures. . . . In the Tashkent district, for example, a considerable number of farmers arc taking no part in harvesting cotton, and those who are, are fulfilling only half of their daily assignment. A similar situation prevails throughout the Fergan province.’ ’This crisis, which seems to have arisen from peasant passive resistance, was overcome eventually by the introduction of special shock brigades.

One of th‘ most illuminating reports, dated midNovember, 1948, comes from the Sverdlovsk province. It reads as follows: —

A number of Sverdlovsk province enterprises do not fulfill their production programs of essential articles; the Provincial Party Committee is content merely to see that gross production plans as a whole are fulfilled to schedule. Technological discipline is often neglected. At Uralmashzavod alone, loss accruing from scrap amounted in the past eight months to 8 million rubles. Disorder and muddle reigns supreme at many works. Surplus accumulations are neglected. New production teclmiques and mechanization are being applied in too slow and leisurely a fashion, particularly in the metal, coal, timber, and building industries. The greatest drawback in many Sverdlovsk enterprises lies in the fluctuating labor force, which in turn is due to the Provincial Party Committee’s neglect of the workers’ material well-being, and to the insufficient attention paid to the housing problem in the province.

The particular significance of this report is that Sverdlovsk is one of the new post-war areas of special industrial development.

The waste of materials through bad planning and faulty production would not be tolerated fora week in American or British industry. The degree is best indicated by the reports quoted and by olhors now coming in concerning the amounts saved in recent months. In January, 1948, the Ministry of Light Industry instituted a “stop waste” drive in the province of Sverdlovsk. By the end of September, material had been saved sufficient to manufacture an additional 392,000 pairs of boots, 168,000 knit ted garments, and tens of t thousands of coats and suits.

A leader in the issue of Pravda dated January 11, 1949, drew special attention to the need for sav ing steel. The plan for 1949 is to reduce the consumption of the steel-using industries by ? percent while maintaining their output of finished articles. I he steel used in a STSZ caterpillar tractor is to be redact’d by 8 per cent, in 20-ton cranes by 10 per cent, and in 50-ton cranes by -9 per cent. These figures indicate that there must have been considerable wastage in the past; indeed Pravda said that “no deviation from these standards is to be permitted, however slight, and ll is the duty of Party workers in factories to exercise their rights of supervision to eliminate waste.”

A survey of the Soviet iron and steel industry, based upon the official figures of out put in relation to numbers employed, shows that there is had labor organization. By using British methods of production the output of many of the plants could be obtained with one-third fewer workers.

Machinery maintenance, Its American or British standards, is often bad, and this results in faulty output. A recent survey made at the elect rosteel works near Moscow showed that over a period ol three months 22 per cent of the output of stainless steel was faulty. The Magnitogorsk plant has received several complaints from the Donbas coal syndicate about the bad quality of wire rope. The Tralselmash works was reprimanded in January, 1949. for wasting steel, and the Krasny Kotelshcik works at Taganrog for wasteful cutting of steel sheets.

3

THE backwardness of many Soviet enterprises, in comparison with American and West-European standards, is indicated by the pride with which they announce proposed improvements 1 hat have been regarded as a matter of course for many years in capitalist industry.

A letter written by the leading officials of a number of Moscow enterprises and made public on Januarv 25, 1949, detailed the measures they envisaged for improving production. They included “the introduction of highly productive technical processes, the use of conveyer belts on a large scale, the extension of mechanization, the rationalization of the supply of raw materials, the elimination of unproductive processes, general economy in the use of fuel and power, and expeditious deliveries to consumers.” The director of the Egorev coachbuilding works at Leningrad claims proudly that the “introduction of conveyer-belt methods has led to a reduction of 3000 hours in the time required for building each passenger coach.”At the Korox Elektrosila works in the same city the time to produce a Dneprovsk turbogenerator has been cut from ten to six months.

The letter quoted shows how difficult it is to arrive at any accurate standard of comparison between Russian industry on the one hand and British and American industry on the other. Mhile one Soviet steelworks may be using equipment up to the standard of Pittsburgh or Scunthorpe, another is using machinery that should have gone for scrap twenty years ago. There is also a tremendous variation in the quality of output; much of the clothing on offer in the Moscow stores would be unsalable in New York nl a quarter of the present prices. Recently the citizens of Kiev were delighted to see in the stores a supply of rubber and leather footwear of high quality and good finish. It came from the Bata works at Zlin in Czechoslovakia.

It is this difference in standards that makes it so difficult to evaluate the Gosplan report and forecast the future potentialities of Soviet industry. That there has been a remarkable recovery from the ravages of war, especially in agriculture, is unquestionable, but short-term expansion has been achieved at the expense of long-term planning. The result has been lack of coordination in production, overcapitalization of plant, and groat neglect of workers’ living conditions.

Early in January, 1949, a considerable portion of the Latvian textile industry was idle because it had received no raw materials from the ministry. The official journal Sovietskaya Latvia complained that a similar sit nation existed in the footwear and rubber industries. At the beginning of this year, production at the Stalingrad tractor works was held up because the Yaroslav “Pobeda Rabochikh” plant had failed to deliver supplies of enamel. Production in the Kharkov tractor plant was halted at about the same time because the Egorev works had not delivered sufficient “ferrado” bells. On January 12 a supply of belting was sent by air from Moscow to Stalingrad and Kharkov. Neil her plant had held in stock more than one days supply of belting or enamel, which seems to indicate that their production is on a hand-to-mouth basis.

A new industrial economy campaign, announced in Moscow on January 26, 1949, throws a revealing light on the degree to which many enterprises are overcapitalized in relation to their output. The purpose of the campaign is to “speed up the turnover of working capital,” and 103 Moscow enterprises have undertaken to “release the sum of 400 million rubles in 1949. The Stalin motorworks plans to save 30 million rubles, the Stupinsky metalworks to million, and the Kaganovich ball-bearing works 10 million rubles. The inclusion of these plants in the scheme to save money is of interest because in the past they have been cited as among the most efficient enterprises of the Moscow region.

Railways remain a particular problem for the Soviet leaders, for in 1948 the average turn-round time for freight loads was longer than what had been planned. The situation was aggravated by the shortage of ears and locomotives, which continued to be acute in spite of large-scale requisitioning in Poland.

In the coal industry there is a growing tendency for coal-cutting machines to fall behind their planned output, which may well be due to exhaustion of the operatives. In the oil industry, drilling fell behind schedule in the second half of 1948 a deficiency admitted in the Gosplan report — and the rate of output of textile machinery is giving cause for anxicty.

It may be that the Soviet leaders, when they look at the over-all picture of the shortcomings and difficulties of industry, will begin to realize that many of them may be due to the mental and physical exhaustion of the labor force.

Such recoverv as has been achieved since 1944 has been at the price of driving the Russian workers as they have never been driven before under the Comnumist state. The Soviet plan for extracting the maximum output from the individual is perfectly simple — and quite inhuman. Each worker is set a “norm,” the amount of work he or she must do in the working day to secure the minimum wage. Prices of food and essential articles are fixed at a level which ensures that it is virtually impossible to maintain life on the minimum wage. It is therefore necessary for the worker to exceed the norm, not once or twice a week, but every day, alt the year. If it is desired to increase output still further the norm is upgraded or prices of the essentials of life are raised.

There is no Communist equality in the rates of wages and salaries. The following table has been compiled from details taken entirely from official Soviet publications: —

These figures take on greater reality when compared with prices prevailing in the state stores. A pair of poor-quality shoes costs 300 rubles, a pair of rubber shoes 60 rubles. A ready-made man’s suit is priced at 600-700 rubles, a woman’s dress at 400 rubles. Beef costs up to 100 rubles per pound on the “free market,” cigarettes 2 rubles each, a box of matches up to 20 rubles, and a packet of hairpins 15 rubles.

The following is the monthly budget of a miner working as a coal cutter and classified as a Stakhanovite — that is, a person who exceeds his norm regularly: —

Out of the remaining money, he has to pay for clothes for his wife and himself, amusements, travel, replacement of furniture, and so forth.

The Soviet economy depends as well upon the exploitation of a great force of prison labor. No one except the Ministry of State Security knows how many of these slave workers there are, but their total is certainly not less than three million. They are not paid any wages and their rations are only a bare subsistence. In addition to (bis form of labor, the Soviet government has recently introduced a system almost exactly the same as that of the Nazi Labor Front. Young male Russians are to serve in camps at which they will receive pre-military training and will be employed upon constructional work of national importance. They are to be known as “the State Labor Reserves.” This system places in the hands of the Soviet rulers a highly mobile labor force that can be used as shock brigades and switched at short notice from one job to another.

Such is the over-all picture of Soviet industry. It is not complete, and it can never be complete so long as the Kremlin exercises a rigid censorship on both internal and external news and imposes heavy penalties for the disclosure of the type of economic information to be found in any official American or Brit ish journal.

All the same, it is possible to draw certain conclusions from the available information. The Russian industrial system has undergone great expansion since the war, especially in the defense areas cast of the Urals. Both the industries and the agriculture of the Ukraine have made a remarkable recovery from widespread war devastation. Road and water systems of communication have been improved to a material degree in many parts of the Soviet Union, with an accompanying expansion of road transport. Russian citizens are now being urged to purchase the Moskvich — the Red equivalent of t lie Nazi Volkswagen. In contrast the railways have lagged behind, hampered by a shortage of track and locomotives. The supplies of coal, oil, nickel, bauxile, wool, and rubber are a long-term headache for the Soviet planners.

But to the outside observer it would seem that the danger point is not to be found in the light-industry crisis or in wasteful and uncoordinated production, but in the excessive strain that is being placed on the labor force. Labor is in no position to protest against the tempo of the production speed-up, for Russian trade-unions are part of the state’s speeding-up machinery. It cannot slack off to take even a few days’ rest, for an unattained norm means an empty stomach, and two days’ absenteeism is punished by as much as six months in a reformatory labor camp. Under such conditions labor, used in competition with some three million slave workers, can be worked full-out for a long time, but when the breaking point is reached, the collapscof productive effort is often complete. There are indications — few as yet that certain sections of the Russian working force are not far from the breaking point. If that should be reached even in one or two key industries, the whole pattern of Soviet economic pianning would be changed fundamentally and quickly.