Problems in Economics

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The Leninist Methodology of Studying the

Proportions of Reproduction

G. Sorokin

To cite this article: G. Sorokin (1976) The Leninist Methodology of Studying the Proportions of
Reproduction, Problems in Economics, 18:12, 3-28

To link to this article: https://doi.org/10.2753/PET1061-199118123

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 Planovoe khoziaistvo, 1975, No. 8

G. Sorokin

THE LENINIST METHODOLOGY OF STUDYING

THE PROPORTIONS O F REPRODUCTION

The recently published Thirty-Eighth Leninist Collection ( 1)

contains hitherto unknown materials by V. I. Lenin on problems
pertaining to reproduction. Dating back to 1913, they are the
drafts of a plan and materials for a work on R. Luxemburg's
book The Accumulation of Capital. Even though the plan to write
a new work on accumulation was not carried out, the prepara-
tory materials are of great scholarly interest, introduce u s to
Lenin's creative laboratory, and hold great importance for the
study of expanded reproduction. Lenin's documents -especial-
ly the four tables cited - characterize different aspects of re-
production in precapitalist formations under capitalism and so-
cialism. Scrutinized in particular a r e the two departments of
social production, national income, accumulation, consumption,
the g r o s s social product, and constant and variable capital. 0 t h -
e r new features include the very detailed characterization of
socialist reproduction, the quantitative expression of levels of
socialist production and its reproductive relationships in com-
parison with reproduction in preceding epochs.
Valuable conclusions are presented on key questions pertain-

The author is a corresponding member of the USSR Academy

of Sciences.

3
4 PROBLEMS O F ECONOMICS

ing to the political economy of socialism, and problems that

were long considered debatable by some scholars are entirely
clarified.
It should be noted f r o m the very outset that Lenin immediately
places the study within specific historical bounds. He does not
discuss reproduction in general but rather under slavery and
serfdom, capitalist and socialist reproduction. Consumption is
analyzed not only as a whole but also with respect to c l a s s e s
(under capitalism consumption by workers and consumption by
exploiters, etc.). Only such a formulation of the study of re-
production - applicable to one o r another economic epoch -
makes i t possible to elicit the objective laws and to reveal the
mechanism of i t s development. The historical approach makes
concrete research obligatory and is a safeguard against scho-
lasticism and meaningless abstractions, Lenin recognjzed sche-
matic and quantitative expression under one invariable condi-
tion - if the schemes and proportions are constructed in full
accordance with the nature of the economic phenomenon, with
the patterns of i t s dynamics. "Schemes alone cannot prove any-
thing: they can only illustrate a process if i t s separate ele-
ments have been theoretically explained." (2)
The tables published in the collection a r e b a s e d on a thorough-
ly developed theory of social reproduction. In these tables Le-
nin establishes periods: 2,000 y e a r s of slavery and serfdom,
200 years of capitalism, 100 y e a r s of socialism. The collec-
tion's compilers correctly note that in the given instance social-
i s m is viewed as a future social o r d e r- the allusion is to com-
munist society as a whole and not only i t s first phase. The
aforementioned periods make possible the full disclosure of the
patterns of reproduction and at the same time emphasize the
dynamism of the socialist order. It took precapitalist societies
twenty centuries, capitalism two centuries, and socialism (com-
munism) one century to "emerge." The vast periods of time,
while making it possible to establish the main historical trends,
do not exclude the necessity of studying individual periods in the
development of one o r another economic system. Thus the draft
of the work plan in connection with R. Luxemburg's book poses
APRIL 1976 5

the task of investigating the realization of surplus value under

imperialism.
The socialist stage in the new Lenin work has attracted the
attention of modern Marxists. Lenin views the socialist (com-
munist) economic order as the highest stage of economic devel-
opment, one far superior to the capitalist level. The approxi-
mate scales by which Lenin characterizes various socioeconom-
ic formations a r e as follows. Capitalism increases production
(the social product) 22 times compared with preceding forma-
tions, while socialism (communism) exceeds the capitalist level
88 times. Thus socialism (communism) solves its social and
economic problems, including the problem of attaining optimal
proportionality, on the basis of high r a t e s and levels of produc-
tion. High, stable growth r a t e s of social production are an in-
variable and important feature of socialist reproduction.
The division of all production into two departments and the
study of the interrelationships between them hold particular im-
portance for the characterization of social reproduction. Until
now we did not know Lenin's direct pronouncements concerning
the development of Departments I and I1 of social production
under socialism. Now they a r e known. Lenin's tables present
calculations of growth r a t e s of both departments and data on the
organic structure of production. In general analysis it is en-
tirely admissable that organic structure and technical structure
coincide and that thereby an increase in organic structure causes
the preferential growth of Department I. In Table 1 the produc-
tion of the means of production and the production of consumer
goods in precapitalist formations increased by 100 percent in
2,000 years. During 200 y e a r s of capitalism, production in De-
partment I increased 10 times, while production in Department
I1 doubled. During 100 years of socialism, production in De-
partment I increased 20 times, while production in Department
I1 increased 20 times according to one variant and 10 times ac-
cording to a second variant. In subsequent calculations (Table,
2, 3, 4), if we consider as equal the value of fixed capital (C) -1
the value of the annual product and the value of the means of
production employed, the dynamics of the departments will
6 PROBLEMS O F ECONOMICS

be as follows (in conditional units):

C v c:v
Table 2
2,000 (years of slavery and
serfdom) 100 100 1: 1
200 (years of capitalism) 1,000 200 5: 1
100 (years of socialism) 10,000 1,500 6.33: 1
Table 3
2,000 ( y e a r s of slavery and
se r f do m) 2 2 1: 1
200 (years of capitalism) 100 10 10 : 1
100 (years of socialism) 10,000 500 20 : 1
Table 4
2,000 (years of slavery and
serfdom) 2 2 1: 1
200 (years of capitalism) 100 10 10 : 1
100 (years of socialism) 10,000 500 20 : 1

We have cited the basic calculations on the dynamics of con-

stant and variable capital and on the organic structure of aggre-
gate capital (with respect to socialism, such terminology is of
course conditional).
In the tables there are also certain other approaches to the
calculations. The amount of variable capital is determined with
due regard to consumer goods contained in "t" and used for the
expansion of production. Then the other part of accumulation
in "t" should be jointed to "C." However Lenin evidently deemed
it possible to get along without additional calculations, consid-
ering the data presented in the tables, and especially in the last
table, to be sufficiently convincing for the characterization of
the dynamics of the various p a r t s of capital and i t s organic
structure. A s indicated in the notes of the compilers of the col-
lection, Tables 1-3 are in the nature of a draft, while Table 4
is a fair-copy variant. The following is unquestionable: com-
APRIL 1976 7

pared with capitalism, socialism sharply increases both the

production of the means of production and the production of con-
sumer goods; the organic structure of "capital" also grows,
which predetermines the more rapid growth of Department I
under socialist conditions as well, but with a lessening of the
disparity in rates. Such is the trend over a long historical peri-
od. However, one of the assumptions in Table l, when produc-
tion in both departments under socialism increases at a uniform
rate, is very interesting. It can be considered that under given
conditions not only do the means of production and consumer
goods become equal, but they also develop at an equal rate.
The publication of the new Lenin materials on reproduction
and the experience amassed in communist construction make it
possible to sum up the results of the extended discussion on the
law of the preferential growth of the means of production under
socialism. The point of viewof authors who have rejected the
existence of such an economic law under socialism has proven
to be entirely insolvent. At the same time, the single-valued
solution of the question of the preferential growth of Department
I must be supplemented by the recognition of the possibility of
the closer proximity of the two departments during the period
of mature socialism even within the framework of the preferen-
tial development of the production of the means of production,
and of the development of Departments I and I1 at a more o r less
even rate in individual periods under the most favorable circum-
stances.
Lenin's r e m a r k s on the consumption of workers under social-
i s m and the relationship between accumulation and consumption
are of great importance. In Table 4 workers' consumption in-
creases 120 times compared with the capitalist period, and the
consumption of exploiters is naturally entirely eliminated. Ac-
cumulation increases 30 times, and personal consumption in-
creases 60 times. Such is the basic approach t o consumption
under socialism. In proportion to the universal victory of com-
munism, consumption not only increases in absolute t e r m s but
there is also an increase in its share in national income. The
table under investigation admits the use of four-fifths of total
 PROBLEMS O F ECONOMICS

national income f or the needs of consumption.

The new materials, just like other works by Lenin on rep ro -

duction, are of gr e a t general methodological importance. Le-
nin' s methodology of analyzing reproduction is exceptionally im-
portant for the elaboration of the Tenth Five-Year Plan and the
long-term plan. Following t hi s methodology, it is essen tial t o
examine in particular economic proportions in the period of de-
veloped socialism and the significance that balanced reproduc-
tion holds for the e a r l i e s t realization of the task s in the CPSU
program.
Prope r proportionality is a very important condition fo r
planned expanded reproduction. Proportionality in a socialist
economy is determined by a high level of division of labor and
socialization of production, by the place of the national econ-
omy in the socialist world, and by the action of economic laws.
Proportionality is based on objectively conditioned relations be-
tween phases of reproduction, between branches of the national
economy, between economic regions and countries in the social-
ist community. These relations are quite vast and with the in-
creasing division of labor continue to i ncrease in complexity.
For theoretical analysis and national economic planning, basic
proportions, within the framework of which p artial proportions
form, are singled out.
In the reproduction p r o c e s s the following basic proportions
are realized between: social needs and the magnitude and com-
position of the product; Departments I and I1 in social produc-
tion; implements of labor, r a w m a t e r i a l s , and labor power;
heavy and light industry; industry and agriculture; production
and transport: the necessary and surplus products; accumulation
and consumption, component p a r t s of national wealth; incomes
of the population and r e t a i l t r a de turnover; exports and imports,
government revenues and expenditures, etc. In other words,
proportions must be made commensurate in each state of pro-
duction and phases of reproduction must correspond. The basic
economic proportions e xpr e s s the most important relationships
that arise in the course of production, distribution, exchange,
APRIL 1976

and consumption. Since material production is the main and

decisive phase of social reproduction, i t s planned course de-
pends f i r s t and foremost on correct proportions in production.
The planning of proportions presupposes a knowledge of the eco-
nomic nature of proportionality, the objective trends in i t s de-
velopment, and the availability of material and labor resources
in the hands of society for the attainment of the r a t e s and rela-
tionships required for the construction of a communist economy
and for the elimination and prevention of disproportions. On the
basis of planning practice, a great deal of experience in the de-
termination of proportions h a s been amassed and methods have
been devised for calculating and projecting them. This practice
is of great value and requires in-depth scientific generalization.
A s convincingly shown in Lenin's tables, proportionality is
determined by the type of reproduction. It is historically deter-
mined and changes together with the development of one o r an-
other economic formation. Every mode of production has i t s
own characteristic type of proportionality, and the transition to
a new social type of proportionality is associated with revolu-
tionary change in the mode of production. Proportionality
evolves continuously within the framework of the predominant
production relations. Under capitalism the road to the propor-
tions under which the realization of the product can be improved
runs through antagonistic contradictions between social produc-
tion and private appropriation, between production and consump-
tion, through crises. Under socialism the dominance of public
ownership makes it possible to attain the necessary proportions
on a nonantagonistic basis, which a s s u r e s planned reproduction
without crisis. The dynamic character of the proportions com-
pels u s to speak of the necessity for a certain proportionality
and not of the viewpoint of equilibrium. (3)
Every period in communist constructi& is notable for certain
specific reproductive relations. Thus the proportions in the
transition period and in the socialist economy differ sharply
from one another. The transition period is the stage of revolu-
tionary change in the proportions of economically backward pre-
revolutionary Russia and the transition to a new proportionality.
10 PROBLEMS O F ECONOMICS

A totally new proportionality forms on the basis of the mono-

lithic socialist order. The transition period was characterized
by heterogeneity of socialist structure. The share of nonsocial-
ist elements in 1928 amounted to 56 percent of the national in-
come and 97 percent of agricultural output; in 1924 the share of
capitalist elements in the total population was 8.5 percent.
Equally heterogeneous were the economic proportions behind
which the various economic structures stood. Trends in the de-
velopment of reproductive relations were determined by the
growth of the socialist sector, by the struggle with capitalist
elements, and by the socialist restructuring of small-scale
commodity production. The proportions formed as a result of
forces operating in different directions, and the elimination of
trends running counter to socialism required no little amount
of additional effort and costs on the road to the socialist type
of proportionality. The pressing needs of socialist construction
necessitated a high share of accumulation in the national income
with a certain restriction on the growth of consumption, the re-
distribution of resources in favor of socialist industry, a sharp
change in the correlation between heavy and light industry, and
the transformation of heavy industry into the full-fledged leader
of economic progress. Labor proportions were reorganized in
the same direction. At the same time, the distribution of man-
power by branches of the national economy resolved the large
and complex problem of eliminating urban unemployment and
agrarian overpopulation (approximately 10 million persons in
1928).
Mature socialist society h a s its own type of reproductive re-
lations that correspond to the nature of the first phase of com-
munism. Owing to the high level of the socialist economy, the
means of production and manpower are more and more purpose-
fully distributed among branches of the national economy, which
a s s u r e s the fullest utilization of the productive forces and their
development at a high rate. The goal of socialist production
the universal satisfaction of social needs and the creation of
-
conditions for the comprehensive development of the individual,
the construction of the material and technical base of commu-
APRIL 1976 11

nism - is the central axis around which the proportions of a

mature socialist economy form. The principal means of bring-
ing about a progressive change in economic proportions is to
introduce the advances of the scientific and technological revo-
lution into production and to increase the effectiveness of pro-
duction in every way.
In a developed socialist economy the relationship between
branches of the national economy is more harmonious, the pos-
sibility for the optimal combination of accumulation and con-
sumption is created, and major socioeconomic disproportions
inherited from capitalist society, e.g., disproportions between
the needs of the national economy and the production of techni-
cally sophisticated means of production, between industry and
agriculture, etc., a r e eliminated. Owing to the vast scale of
production, i t s social homogeneity, high growth rates, the use
of intensive methods of development, and the accumulation of
production reserves, the economic proportions of socialist so-
ciety a r e more mobile and can be easily changed in the desired
direction. The international socialist division of labor also ex-
e r t s a stronger and stronger influence on the economic propor-
tions of national economies. The socialist countries' policy of
peaceful coexistence with capitalist countries and economic re-
lations with them also influence reproductive relations. The
formation of a worldwide socialist economy engenders new eco-
nomic proportions - relations between parts of the world econ-
omy - that play an ever greater role in the economic develop-
ment of socialism.
The general direction of change in the basic proportions of
the socialist economy can be plotted on the basis of data in
Table 1. (4)
In o r d e r t o describe fully the changes in proportions, it is also
necessary to calculate them in comparable prices.
If we speak of general trends in the improvement of propor-
tionality, we should note the following very important changes.
In a social sense the proportions become homogeneous and so-
cialistic in comparison with the period of transition. The cre-
ation of the material-technical base of socialism permitted the
12 PROBLEMS O F ECONOMICS

transition from the forced and i n some years one-sided devel-

opment of the production of the means of production to the m o r e
even growth of the means of production and of consumer gc ods,
of heavy and light industry. P r o g r e s s i n agriculture is receiv-
ing a f i r m social and m a t e r i a l base. In national income the
s h a r e of consumption is growing significantly, while the sh are
of accumulation ha s declined 1.5 o r m or e times with a system-
atic increase in the mass of accumulation.
But the proportionality of developed socialist society is also
being continuously improved, The strengthening of public own-
ershi p and the c l os e r proximity between government and collec-
tive fa rm ownership intensify the social homogeneity of econom-
i c proportions and the possibility of their control by society.
The proportions between departments of social production,
branches of the national economy, the necessary and surplus
product, and accumulation and consumption mo re and mo re co r-
respond to the many-sided development of memb ers of society
and to the improvement of their well-being. The economic in-
tegration of socialist countries is expanding. Nonetheless, the
problem of balance and proportionality i n the economy continues
to be very urgent. This is due to the dynamic ch aracter of so-
cialist proportionality, to the need to adapt it to the task s of
communist construction, to the solution of the problem of elim-
inating bottlenecks and existing partial disproportions.
In the Tenth Five-Year Plan and in the mo re distant future,
the formation of reproductive proportions must be primarily
dependent on the program f or the improvement of the people's
well-being, for increasing the effectiveness of production and
the quality of production in every way, f o r high r a t e s of devel-
opment of branches insuring the increased production of con-
s u m e r goods and the introduction of progressive technology.
High growth ra te s , proportionality, and the transition to inten-
sive methods of development are closely interconnected.
The rapid growth of key branches leads to optimal proportion-
ality and heightened effectiveness, while balance is a very im-
portant condition for high growth r a t e s and for the intensifica-
tion of production. Without the ever gr eater u se of intensive
APRIL 1976 13

methods and the improvement of product quality, it is impossible

either to sustain high growth r a t e s or to secure the correspond-
ing proportionality.
With the close interrelationship of reproductive processes
there arises a methodological problem: how to find the basic
fulcrum in order to organize the movement of reproduction in
the necessary direction. In investigating complex phenomena
in which everything is connected and one thing depends on an-
other, it is important 'Yo avoid the vicious circle of precondi-
tions." (2)
In determining rates and proportions, national economic plan-
ning constantly encounters its own "vicious circle of precondi-
tions," and thus it is essential to find the place where the circle
of dependence must be cut and the main links making up the
chain of economic development must be singled out. Here is an
example from the history of Soviet economics. In February
1921 a grave situation developed in the Donbass. Everything
formed a single chain: there was no bread because there was
no coal; there was no coal because there was no bread. What
was the way out of the situation at the time? "Here we must,"
stated Lenin, "break this accursed chain somewhere with our
energy, with pressure, with the heroism of the working people
so that all the machines will run." (6) At the present time there
are also other material factors in addition to the energy of the
working people for breaking the chain of dependences. Nonethe-
less, the methodological approach developed by Lenin to the
planning of reproduction retains i t s full force in our day a s well.
In the investigation of economic dependences there must nec-
essarily be a concrete historical approach to reproduction. An
excessively abstract, dogmatic approach can engender only
scholasticism. W e recall that when, in opposition to a specific
plan for electrification, some scholars considered the plan i n
general, Lenin called this the most boring scholasticism and
chatter. At the same time. in elaborating the specific plan of
socialist construction, Vladimir Il'ich pointed to the necessity
of singling out the leading links in the economy and called atten-
tion to the fact that in the practical formulation of the problem
14 PROBLEMS OF ECONOMICS

Table 1

1960 1965 1970 1973

G r o s s social product and

national income*
share of national income
in g r o s s social prod-
uct 47.7 46.1 45.0 44.0
Necessary and surplus
products'
share in national income
of:
necessary product 49.7 49.0 45.8 46.0
surplus product 50.3 51.0 54.2 54.0
Accumulation and con-
sumpt ion*
share in national income
consumption 73.2 73.6 70.5 71.0
accumulation 26.8 26.4 29.5 29.0
Two departments of social
product*
share in social product:
Department I 59.5 61.0 62.0 63.6
Department I1 40.5 39.0 38.0 36.4
Industry and agriculture**
growth of fixed produc-
tive capital (in %):
in industry 100 169 2 56 326
in agriculture (ex-
cluding livestock) 100 159 242 330
growth of capital invest-
ment (in %):

*In actual prices.

**In comparable prices.
APRIL 1976 15

Table 1 (Continued)

1960 1965 1970 1973

-~ ~

in industry 100 138.2 192.1 227.4

in agriculture 100 175.7 264.9 360.7
share of agriculture in
total capital invest-
ment in the national
economy 8.0 16.7 17.5 20.3
Group "A" and Group "B"
industry * *
share in industrial
output :
Group "A" 72.5 74.1 73.4 73.7
Group "Brt 27.5 25.9 26.6 26.3
Production sphere and
service sphere
share in total work
force:
production sphere 82.9 79.9 77.4 76.4
service sphere 15.7 19.6 20.9 23.6
USSR economy and wor
economy
relationship of total for-
eign trade turnover to
national income*** 6.9 7.6 7.6 9.3
relation ship of foreign
trade turnover with so-
cialist countries to na-
tional income*** 5.1 5.2 5.0 5.4

**In comparable prices.

***In prices of the corresponding years.

this was by no means an easy matter. "At any specific moment

one must be able to find the specific link in the chain which one
16 PROBLEMS OF ECONOMICS

must seize with all one's strength in order to hold the entire
chain and must make f i r m preparations for the transition to the
following link. What is more, the order of the links, their form,
their coupling, and their difference from one another in the his-
torical chain of events a r e not as simple and not as crude as in
the ordinary chain made by a blacksmith." (7)
The concrete historical approach to planning requires that the
facts be studied from the standpoint of the theory of reproduc-
tion, i.e., the selection of significant basic supporting facts,
moreover on the whole, in their unified link, which alone leads
to the understanding of the essence of a phenomenon. It is im-
portant that the facts be investigated precisely to the degree
that it is possible and that they "be different moments of devel-
opment one to another; it is especially important that the entire
series of known events, their sequence and the link between dif-
ferent degrees of development be investigated with the s a m e
precision." (8) The study of the greatest possible number of
states of reproductive relations at various stages of develop-
ment makes it possible to single out the driving contradictions
in each proportion, to determine their reciprocal influence, and
to establish the most rational structure of the national economy.
Thus there is a relative contradiction between accumulation and
consumption, since both elements influence the expansion of pro-
duction in different ways: one through the increase in fixed cap-
ital in the future, and the other through the heightened interest
in the work force in increasing labor productivity in the present.
Accumulation predetermines the scale of production of the
means of production, while consumption predetermines the pro-
duction of consumer goods, etc. Consideration of all relation-
ships and their consequences makes it possible to elicit the op-
timal combination of branches and phases of reproduction.
Thus the first methodological demand on the study of repro-
ductive relations is to lay a foundation made up of precise and
indisputable facts, to take them as a whole in their development,
and thus to approach the main link and mode of coupling i t with
other links in the economic chain.
Lenin defined planning as deliberately maintained proportion-
APRIL 1976 17

ality. For the deliberate maintaining of proportionality it is not

enough to know the main proportions and trends toward change
in these proportions; it is essential to study the mechanism of
formation of proportions, to learn how to use this mechanism
and to improve it as productive forces and production relations
develop. This is assured by the realization of another method-
ological demand on the planning of proportions - the choice of
means for the attainment of optimal economic relations.
Unfortunately, works on economic proportions frequently do
not meet the described conditions. Instead of a concrete study
of proportions, their reciprocal influence, and ways of improv-
ing them, abstract constructs remote from actual life processes
are proposed. Thus they reduce the basic economic law of so-
cialism to the growth of consumption, transform consumption
into an absolute, and do not see i t s dependence on the expansion
of production by intensive methods. But Marx and Lenin re-
peatedly explained that distribution and consumption can be un-
derstood only by studying the process of reproduction as a
whole, that the questions of national income and national con-
sumption a r e absolutely unsolvable when posed separately. (9)
Today, at the threshold of the Tenth Five-Year Plan and the
long-term plan, we must be particularly attentive in analyzing
the most important interconnected economic phenomena and
must single out the leading links with respect to the specific
historical situation. L. I. Brezhnev, secretary-general of the
Central Committee of the CPSU, noted that the new five-year
plan is primarily a five-year plan of quality, a five-year plan
of effectiveness in the name of the further improvement of the
people's well-being. To a significant degree effectiveness de-
termines the rates and economic proportions of today's econ-
omy. The advantages of the socialist system, the exhaustion of
extensive growth factors, and the broad utilization of the attain-
ments of the scientific-technological revolution transform the
growth of effectiveness into the decisive factor in socialist r e -
production. If we take such a summary indicator of effective-
ness as the net income of the national economy (the excess of
the value of the gross social product over the costs entailed in
18 PROBLEMS OF ECONOMICS

its production), according to the data of interbranch balances in

-
1959, it amounted to 64 billion rubles; in 1956 98 billion ru-
bles; and in 1972 - 155 billion rubles. In thirteen years the
country's net income increased 2.4 times o r grew by an aver-
age of 7.1 percent a year. It is not difficult to understand the
significance of these figures when we remember, for example,
that total revenues of the ZJSSR state budget in 1972 amounted
to 175 billion rubles. The main lever for increasing effective-
ness is the increase in labor productivity. Between 1960 and
1973 the latter rose by 102.4 percent (an average of 5.6 percent
a year). Owing to the growth of labor productivity in the Ninth
Five-Year Plan, a saving of more than four million persons
(calculated on an average yearly basis) will be effected. From
the foregoing it is clear that the balance of the national economy
can be reduced only on the basis of increased effectiveness. But
the planning of proportions requires a more concrete under-
standing of the dynamics and factors underlying i t s growth,
which requires the study of labor productivity, the output-capital
ratio, material intensiveness, as well as newly introduced
equipment, since all three levers underlying the growth of ef-
fectiveness - reduction of labor inputs, fixed capital, and ma-
-
t e r i a l s are associated with the raising of the technical level.
In devising measures for attaining and sustaining proportion-
ality of the required type it is important to know the dynamics
of effectiveness. In recent years there has been a definite low-
ering of the average yearly growth rate of individual indicators
along with the growth of the absolute magnitude of the economic
effect (Table 2).
A s is evident from the data cited, the growth rate of produc-
tivity of social labor and of output per unit of input and the
output-capital ratio declined somewhat, while material inten-
siveness tended to increase. In order to improve the dynamics
of the indicators of effectiveness and to make the proportions
more dependent on intensive methods of production, it is nec-
essary to elaborate effective measures for raising the growth
rate of labor productivity, increasing the output-capital ratio,
and lowering material intensiveness.
APRIL 1976 19

Table 2

1966-70 1971-74

Productivity of social labor (in %) +6.50

Labor productivity in industry (in %) +5.75
Output-capital ratio (based on nation-
al income produced) (in %) -0.4 -2.3
Material intensiveness per ruble of
social product on the average for
the period (in kopeks) 53.4 53.9
Output per unit of daily production
costs in comparable prices (aver-
age increase per annum) (in %) 2 0.7

In our opinion, the decleration of the growth of labor produc-

tivity is chiefly associated with the underutilization of material
incentives, the slow expansion of the mechanization of arduous
work, and shortcomings in manpower utilization evident in idle
time, unduly high requisitions for manpower, and the undesir-
able migration of workers from the Urals and Siberia. At the
same time, the given processes a r e interconnected: weak stim-
ulation of highly skilled labor through wages impedes the growth
of output, low labor productivity leads to an excessive number
of production personnel, and the large-scale use of manual labor
precludes the release of manpower for other important sectors
o r for a second shift.
The major social reforms enacted in our country - the in-
crease in the minimum wage and pensions - have improved the
material well-being of tens of millions of people. The imple-
mentation of these measures has required significant resources,
and this, together with shortcomings in the organization of labor
to a certain degree, has had an adverse impact on the structure
of wages .
There a r e three components in wages. One of them compen-
sates the legalized minimum; another assures differentiation in
the wages paid to skilled and unskilled labor in keeping with the
20 PROBLEMS O F ECONOMICS

basic wage scale; the third stimulates higher quantitative and

qualitative work indicators. Here is how the relationships be-
tween these p a r t s of worker's wages changed on the average in
the postwar y e a r s (Table 3).

Table 3
(in %)

1975
prelimi-
iary cal-
1950 1960 1970
culations
by the
author )

Average monthly
wage, total 100 100 100 100
Of which:
minimum wage 16.9 34.5 45.9 40.0
addition to min-
imum wage ir
payment for
skill level
and complex-
ity of labor 12.6 18.6 16.5 16.1
remaining p a r t
for paying
for increases
in quantita-
tive and
qualitative
work indica-
tors 70.5 46.9 37.6 43.9

The excessive decline in the differentiation in wages is ap-

parent. The difference between the average and minimum wage
decreased from 3.4 times in 1956 to approximately a twofold
APRIL 1976 21

difference at the present time. It should be added that such an

important form of encouragement as the bonus based on the re-
sults of the work for the year also has little relationship to the
results of labor. Clearly, the improvement of wages together
with further increases in equipment per worker is necessary
primarily for a new upsurge in labor productivity.
More than half the work force in the material-production
sphere is engaged in manual labor. Manual labor is still being
mechanized at an extremely slow pace. Thus as a result of the
insufficient production of the implements of labor, the s h a r e of
manual labor declined by a m e r e 0.6 percent between 1966 and
1972. For this reason the expanded production of the means of
mechanization is a necessary condition for increasing labor
productivity and the effectiveness of production.
The problem of increasing labor productivity in regions fac-
ing a manpower shortage requires special attention. Between
1959 and 1970 an average of more than 167,000 persons a year
left the Urals and Siberia. (10) Research findings show that the
basic reason underlying t h e x s s of manpower is the low level
of amenities in these regions. A purposeful policy of creating
the best cultural, recreational, and living conditions must be-
come the lever for the planned regulation of the migration of
the population and for increasing the effectiveness of the utiliza-
tion of manpower.
Analysis of the lowering of the output-capital ratio makes i t
possible to single out, among other things, the following causes
of this phenomenon: the increase in the unit cost of new capac-
ities, the slow mastery of newly activated capital, the reduction
in the number of shifts that equipment is in operation. Fre-
quently, the efforts of industrial branches to increase the output-
capital ratio a r e brought to nothing by the increased unit cost
of newly activated capacities, The fulfillment of capital con-
struction plans in t e r m s of cost (volume of capital investment)
is frequently accompanied by a 20- 30 percent underfulfillment
of plans for the activation of capacities. Hence a whole s e r i e s
of disproportions that effect the fulfillment of the capital works
plan and that undermine the production programs of many
22 PROBLEMS O F ECONOMICS

branches. The actual construction time and gestation period

are considerably higher than the norm. This leads to unrealis-
tic production plans based on normative construction and gesta-
tion time, to disparities between the construction and production
program. In many cases the commissioning of enterprises is
delayed by the shortage of equipment, i.e., by the lag in machine
building. The lowering of the shift factor at many plants, as
well as the low shift factor in the case of agricultural machine-
ry, reduces effectiveness and causes losses. If, for example,
every one hundred tractors wereoperated by more than two
hundred tractor drivers, the machines could be operated 220
days a year rather than 200 days, as is the case at the present
time. The indicated underutilization of the tractor fleet is the
equivalent of approximately 200,000 tractor-years. ( 11)
Thus the decline in the output-capital ratio- in addition to
the shortage of workers for a second shift and changes in the
structure of production - is also associated with shortcomings
in capital construction, with the lag in the production of the im-
plements of labor, and with the low technical level of labor in
a number of cases.
In the future the increased effectiveness of socialist produc-
tion will depend more and more on the creation and introduction
of basically new equipment that is more productive than the best
equipment of today. Its growth will unquestionably permit u s to
improve economic proportions and specifically: with the same
o r with a smaller norm of productive accumulation, to increase
production at a rapid rate, to allocate vast sums for the devel-
opment of agriculture, light industry, and the food industry, to
significantly expand trade turnover, and to satisfy effective de-
mand more completely. The development of agriculture and
consumer goods production a r e very difficult problems that re-
quire vast sums and time for their solution. The implementa-
tion of the comprehensive program for the development of agri-
culture is associated with the redistribution of the national in-
come in favor of agriculture. Speaking at the All-Union Scien-
tific-Theoretical Conference "Urgent Problems in the Agrarian
Policy of the CPSU in the Present Stage," F. D. Kulakov, sec-
APRIL 1976 23

retary of the Central Committee of the Communist Party of the

Soviet Union, stated: "Considering the growing economic poten-
tial of the nation, the Central Committee of the CPSU and the
USSR Council of Ministers deem it expedient to undertake a
clear redistribution of the national income in favor of agricul-
ture and to increase capital investments in this branch. The
share of capital investments in agriculture in the Ninth Five-
Year Plan will amount to 26 percent of the total investment in
the national economy, which is considerably higher than the lev-
e l of years past. Such an approach to the use of capital invest-
ments fully corresponds to the interests of all society and meets
the demands of the law of planned, proportionate development
of the national economy." (12)
The trend in the redistribution of national income in favor of
agriculture is evident from the following figures (Table 4).

Table 4

1975
(tenta-
1960 1965 19 70
ive cal-
:ulation)

Index:
of physical volume of
national income 100 137 199 238
of agr icultur a1 output 100 112 138 142
of capital investments
in agriculture 100 176 265 364
Resources issued to col-
lective f a r m s for wage
payments 100 155 199 236
Wage fund on state f a r m s 100 197 326 374

Agricultural output and national income created in this branch

grow at a l e s s rapid rate than net output throughout the national
economy as a whole, and investments in agriculture and wage
24 PROBLEMS O F ECONOMICS

funds considerably outstrip them. Nonetheless, agricultural

production is still not sufficient, and i t s technical level is low-
er than that of industry.
By the end of the current five-year plan, the proportions be-
tween the production of the means of production and consumer
goods in industry w i l l be somewhat different than planned (Ta-
ble 5). (13)
-
Table 5

1971 19 72 1973 1974 1975

Means of produc-
tion (Group
"A"):
plan 106.7 115.3 124.1 134.7 146.3
fulfillment 108.0 115.0 12 5.0 135.7 145.5
Consumer goods
(Group "B") :
plan 107.4 115.7 125.1 136.0 148.6
fulfillment 108.0 114.0 120.0 129.0 137.0

The five-year F-an for Group "A" will eviL,ntly be 1If i lled,
but on the whole i t will not be possible to fulfill in full volume
the program slated for Group "B." The shortfall in the com-
missioning of production capacities and in the delivery of raw
materials has occasioned the slower development of consumer
goods production than had been planned.
Overall balance of the economy depends in l a r g e measure on
proportions between Departments I and I1 of social production.
In particular, the planning of technical p r o g r e s s and proportions
in agriculture and industry and in Groups "A" and "B" are
closely connected with it. It is theoretically c l e a r that the
growth of the technical structure of production leads to the rela-
tively m o r e rapid growth of Department I. With the increased
economic potential of society and the effectiveness of accumu-
lation and of fixed productive capital there is a trend toward ac-
APRIL 1976 25

celerated growth in Department II. It does not abolish o r re-

place the former but leads to the closer proximity of growth
r a t e s in both departments. In planning Departments I and I1 for
the immediate future, i t is essential to bear in mind the follow-
ing important circumstances.
An increase in the effectiveness of production is impossible
without the accelerated development of production of implements
of labor corresponding to the demands of the scientific-techno-
logical revolution. This is equally important both for the devel-
opment of labor productivity and for the mechanization of labor-
intensive work and the lowering of capital intensiveness. The
maximum replacement of manual labor by machine labor is the
general line of technical progress for the entire period of con-
struction of the material-technological base of communism.
The total elimination of the lag in agriculture, light industry,
and the food industry is contingent on the delivery of the imple-
ments of labor and raw materials to them, while the increased
division of labor is leading to the rapid growth of Department I
in agriculture proper. According to the interbranch balances,
33 percent of the output of the latter in 1959 went into consump-
tion and approximately 40 percent went to industry for process-
ing. In 1972 the former declined to 24.7 percent, while the lat-
t e r increased to 52.4 percent. Today more than half of the agri-
cultural output is in the form of means of production.
The development of the infrastructure, particularly transport
construction, the insufficient scale of which has begun to impede
the economy, also requires a significant quantity of output in
Department I. The industrialization of the service sphere and
the communist restructuring of everyday life will lead to the
expansion of existing branches and to the creation of new branches
producing "household machines." Finally, the program of social-
ist economic integration presupposes theintensification of the role
of the USSR in supplying socialist countries with raw materials,
fuel, and machinery. At the s a m e time, in characterizing the pro-
portions between the two departments, imports of consumer goods
should be taken into account. On the whole, all this presupposes the
relatively more rapid growth of Department I of social production,
26 PROBLEMS OF ECONOMICS

There is also another trend. More progressive technology in

combination with improvements in management should signifi-
cantly increase output per unit of capacity, per unit of raw ma-
terial and fuel. The more capital intensiveness and material
intensiveness are reduced, the fewer means of production will
be required for the fulfillment of our programs. Change in the
structure of production as a result of the increased share of
relatively less capital-intensive and material-intensive branches
(chiefly the branches in Group "B") also reduces the social need
for the means of production. The rationalization of foreign eco-
nomic relations and large-scale importation of highly productive
machinery can lead to a reduction in the demand for domestic
machines and materials.
These trends in the development of departments of social pro-
duction operate in different directions; one advances Department
I to the forefront, while the other promotes the more rapid de-
velopment of Department 11. But their force is not identical. In
the long run the former trend will unquestionably predominate.
What is more, the effects of these trends differ in time: prepa-
ratory work for the former is required for the more intensive
manifestation of the latter. In order to increase the output of
consumer goods, it is first necessary to supply light industry
and agriculture with the means of production. Within compara-
tively short periods of time, such a sequence of development
can lead to differences in the growth r a t e s of Departments I and
11.
The relationship between these departments is closely asso-
ciated with proportions between Groups "A" and "B" in industry.
Industrial production of the means of production accounts for
approximately 75 percent of the total output of Department I,
while industry has a monopoly on the production of implements
of labor. There are certain differences in the dynamics of De-
partment I and Group "A" of industry in the period of developed
socialism, and they are manifested in changes of their relative
weights (Table 6). However, as yet the differences are slight
and the development of heavy industry, like the development of
Department I as a whole, fully retains i t s paramount importance.
APRIL 1976 27

Social product:
Department I
Department I1
Output of industry:
Group "A"
Group "B"
1959

60.5
39.5

72 .O
28.0
1966

63.2
36.8

74.4
25.6 t 73.7
26.3

The above-described methodological approach to the study

of proportions obligates u s to study them specifically and in
detail in their relationship to one another. Improvements in
methods for calculating reproductive relations are a necessary
condition for improving the planning of the country's national
economy.

Notes

1) Leninskii sbornik XXXVIII, Moscow, Politizdat, 1975.

2) V. I. Lenin, Polnoe sobranie sochinenii, Vol. 4, p, 52.
3) Leninskii sbornik XI. D . 384.
- z 1

4) Narodnoe khoziaistvo SSSR v 1972 godu, Moscow, "Sta-

tistika" Publishers, 1973, pp. 60, 737.
5) Narodnoe khoziaistvo SSSR v 1973 godu, Moscow, "Sta-
tistika" Publishers, 1974, pp. 57, 604, 605, 122, 53, 206, 789,
603.
6) Lenin, -PSS, Vol. 42, p. 364.
7) Ibid., Vol. 36, p. 205.
8) Ibid., Vol. 1, p. 167.
9) Ibid., Vol. 3, p. 53.
10) Migratsionnaia podvizhnost' naseleniia v SSSR, Moscow,
"Statistika" Publishers, 1974, p. 80.
11) Voprosy ekonomiki, 1975, No. 6, p. 30.
12) Pravda, March 25, 1975.
28 PROBLEMS OF ECONOMICS

13) Gosudarstvennyi plan razvitiia narodnogo khoziaistva

SSSR na 1971- 1975 gg., Moscow, "Ekonomika" Publishers, 1972,
p. 76; Narodnoe khoziaistvo SSSR v 1973 godu, p. 54, 1975 (ful-
fillment) taken as the y e a r plan.