THE SOVIET ECONOMY

Document Type: 
Collection: 
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
Case Number: 
Publication Date: 
September 11, 1958
Content Type: 
REPORT
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PDF icon CIA-RDP62S00545A000100090046-7.pdf1.3 MB
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eC/r_ Approved For Release 2000/09/11 62SU01645A00 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, Approved For Release 2000/09/11 CIA-RDP62SO0545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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 Approved For Release 2000/09/11 CIA-RDP62S00545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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= Approved For Release 2000/09/11 CIA--RDP62S00545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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, Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 Approved For Release .2000/09/11: CIA-RDP62SO0545A000100090046-7 _ 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, Approved For Release 2000/09/11 CIA-RDP62SO0545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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 Approved For Release 2000/09/11: CIA-RDP62SO0545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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. Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 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. Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 Approved For Release 2000/09/11 : CIA-RDP62SO0545A000100090046-7 .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