THE SOVIET ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62S00545A000100090046-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 19
• Document Creation Date: December 9, 2016
• Document Release Date: July 17, 1998
• Sequence Number: 46
• Publication Date: September 11, 1958
• Content Type: REPORT

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I
Gen. Johnson, in inviting lie
b$
e,
11 September 1958
that I focus it around eight questions which he posed concerning
the Soviet economy, includes its relations with the political
leadership. At the outset, I should like to assure you that even.
Johnson's ability to ask the right queations Is far superior to
r ability to supply the ri+ answers. However, I hope Uat
what follows is at least partially responsive to his questions.
Objectives of the Cyst Leadershi
The Soviet economy is shaped to serve the needs of the State,
e. To understand why it is structured the way it
what governs the establishment of relative priorities which
control its development over time, we must start with the objectives
reship .
The long-range objective is, of course, world. dcmination.
Comsmmi = is above all else a revolutionary force, striving for
a victory which will be evidenced by the liquidation of capitalilsss:
and the emergence of a Sovietised world order.
The most straightfori and way to accomplish this objective
would be $y direct military action. Military outlays have con-
tinued to enjoy a first priority in Soviet planing.. liver,
direct large-scale military action seems to ruled out in a
hydrogen weapon age as a calculated policy at least while there is
a reasonable balance between the forces of the East and the West.
This caution does not rules out the possibility of amen l wars which,
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the opinion of
firs, would not develop ix
mod, to maintain side cony zitie ,
rtes in being for internal security purposes and to
keep the European Satellites in the Co unist camp. Most 1190s
is a need to develop advanced weapons
itary breai throe h Bch ?ould resolve the present
nuclear stalemate In the Soviets' favor. Should the U R succeeed
in deveLopin ; such superiority, it would not necessarily need
ene" in general war.
SeGGIOA of clear-cut superior
would give them a weapon for political threat and b1aer;ki..l
that could prove decisive, even short of a hot war. ?or th
r e ons, the MR's military
national product, is greaa
worlds. Stated another
economic resources to military a
parallel in the West.
t of any other nation in the
Secondly, the Soviet leadership for the pest
30
followed a policy of forced draft in ustrial1z tiion, centered
on ivy industry. The ros erns for this are , but they are
she objective of eventual world dmi ti .
is, of course, the obvious relationship between heavy
capacity and munitions producing capability. Secondly,
total investment, and Industrial investment in particular, must
high because growth rates must be substantially above those
achieved by the United States. The reason for this is the often
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repeated &remlin objective of eatehing g with
uuost advanced industrial nations, inching the Vaited States
per capita production. The fulf t of this objeeti.
;rushchev believes, viii prove the s riorit r of t Cc _ ist
enterprise system. Rapid
e to the Communist ire of pro se and pover.
provides s o:
abroad, paid
dasri:allzatio
ugh
Lion Of Comma et doc-tirine
developed countri
Soviet-type or izatio
All of this suggests that after the necessary e3.tsti
defense and Investment, there are few
to sati 'y . coast r rest
within the past feev years, chcv bag eked, on & program to
raise the standards of living of the Soviet
? ons for this pry.
Productivity can Inez
Se d, to remove the stism of poverty which attaches to
increa its attractiveness
gees are
of these
cmvpe-
Chart - Conserison Of V2 & man on bsr gad ?)
l; is absolute amount, soviet Gip %s about 41
US in 1957. ems, in _abac
coupe=
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would cost us about as much as our present military
of military goods and sex-vices the Sets are buy-
ant in mining, ufactur , and electric A
Consuupt1
onaur set:
'nlY 35% of that in the U . S . , and o a
as subatas, tially less than this
f that in the U.S. This year such :;.nves :
about equal to our
re to pupae the current
zen puts up
cannot be a svered simply. There are a
of reasons., which can be divided between
types. On the carrot side there is cradle-to-
a smll but perceptible year to year improve rent in liv
and free education. On the stick side there iF the ever present
police. Propaganda Is a powerful force - the creation of
e of the West as war mongers and capitalist exploiters
le in contrast to the Co exist ima&e of peace and im-
proving standards of living tbroui economic growth.
How do the Soviet leaders control their economy?
Control of the &eaLwX
In the Soviet Union, the Con unist Party is in complete
control of policy for atioz and 2a p1ev ntation. At the apex,
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_ 5
co ei.I is the Party Presidium. This body of 15
sided over by Khrushcv, who is ?.irs
the secret lce, a-d g.Lvfessional economic ravagers,
no longer have a direct voice In this council.
for the day -to -day interpretation of policy. Of its tell current
only one,
who does not owe his present position
a longer
to rushchev. The heir - apparent here is iriclxez o, a
is the sole
of the Presidium is the gmup responsible
idi um since 1955, and formerly vas Pirst,
$eczetaxy of the party in Ukraine.
(Briefing Aid -
the center i
This is the top
ion of .icy, with carry1
out decisions of the ParV leadership. The t First Deputies
the past
is not only responsible for develop
role of
GCV-
plans,, but because its newly acquired executive auzthorit.
ble for plan execution. Its chair is zmin
. Kozlov Is a former Leningrad ;
x ration of industry and planning,
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a deputyr chairman of the C
The Coi
misters, which, includes several Viers
of Grospla , also has a more polities flavor than fo
5 Union He Publics sit on it.
do , eeo o in their respective
Republics have direct control of
case of qty Control at the regional
or st rbozy, have enter
ordinate to them v tch are responsible for producin about 75
it of all industrial output.. r ining 25 per c
ial corm ittees
of 1957, thet, substitr
pee lined industrial ministries
previous
product,, enterprises directly
or beneficiaries of
ce a
chtnery
v:s attention to economic mttt, his
party people vaster a knowledge of eeono ics,
and the establi.snt of special courses for Party vorkers to this
sly
ooncew d 'with operations of the econozW. This is a shift a
of Industry by the technic eng eer?ing elite -
the former industrial ministers. The shift must .ve ei
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resentment ou the part of the industrial elite, and bri
question the degree of success the reorganization may bave.
Ecencoac
nee are jj
on our next ch
(Brief
of the national economic plan.
re i rtant ones are highlighted.
Gonatituen
ccou mic plan
estimates of s h key elements as gross value of output for
.musty,
I ssould like to review for you
e, transport, the volt of reta i and forei
ode, the value of capital investment,
2. Production. This sub-plan consists of the output
sceaules for sped 'ic co dities in p sical. units Lu great
m4 is the =at i r'tai t part of the over-all plan.
Jy
cal Gupp1y. Given the production goals,
,tions is d va up designed to provide each
it with the amount of raw aerials; se dfin:ished
Fpitai aqui it need to meet its production goals.
iaa_ 'dance technique utilizes a series of technological
coefficients, or input-output ratios. Gosplan cen
the super of over 1,000 cozwditieb.
La2ital i.stuu. Tbe capital investment el
mo pry functions. First, it provides the increased capital
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ovation has becc+m h more I
Science and Technology h
reporting directly to th
x cottees which x
priority pre ereuces decided iQmi by the Soviet leaders.
wed to increase
3.e
titan, of xewr tecluaolo ;ic
,s been a separate sub DUm since 19
Lion of 1957.
one a
ove -aU suction
output per Yorker ..
7. Cost of rductioz (Se'besto st) . The
cost estimates prepared for each cam: ty and es
skip aver
flow to accompli
BBu
rance,
ri.ry ction o
rs of the ecox o air
.
t1.vity.
n objective
source floes are, on the income aid
the : err from . profits of enterprises and the turnover tax.
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not conclude from this a
lies in greater eff'iciet ey. . the c
rise economies of the
secret of Soviet cuececa is relatively simPle
,At-Tonal policy purposes than
civilian and xUltary research
education and. i st nt in industry.
it:
outlays in 1957, then
aid.,
oreig
Of the U.S. F
to .t expen itures were
r. and d. vas about two-thirds of ours
3. Our foreign aid program was about four times as costly
as that of the Russians.
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.es
ion, as you all know
or education, t
se in our o 1Fn country. ft r
37,0
20.000 pt3ysiciE z per year eompeared
Union this spring