DEVELOPMENT OF SOCIALIST ECONOMY IN THE PEOPLE'S DEMOCRACIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700230100-3
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: July 14, 2011
• Sequence Number: 100
• Publication Date: April 18, 1955
• Content Type: REPORT

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STAT
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DT3Vj tOP1?2IQT'OF 3bCIALIST ECONOMY IR TIIE P30P1.0'3 IEFI)CRACIES
An a result of important social and econor.ic charier, the capitalistic
elar:_nt have been almost wholly removed from industry in the People's Democ-
racies.
The followin" data '.ndicate the progressive increase of the relative pro-
portion of the socialist sector in total industrial production in the People's
D~r:jcracies sinco .ior16 War II. The share of the socialist sector in the total
industrial production of Poland vas percent in 1946, 9J.5 percent in 1949,
an 99.6 percent in 1952; Czechoslovakia, 75 percent. in 1946, 95 percent in
1948,anf 99 percent in 1952; Hungary, 56 percent in 1946, 92 percent in 1949)
and 92 percent in 1952; Rumania, 95.4 percent in 1950 and 96.5 percent in 1952;
Bulgaria, 33.6 p_rcent in 1946, 93 percent in 1948, and 99.9 percent in 1952;
and in Albania, 73 percent in 1947 and 99 porcont in 1952.
In agriculture, the small, individual, peasant farms still predondnate, but
the relative proportion of socialized agriculture in these countries is growing
rapidly, although its over-all level, with the exception of Bulgaria, is still
relatively low. The following table,indicutin,z tr-- extent to which agriculture
has been socialized, shows the percentage o. plowed land cultivated by the so-
cialized sector in the People's Don.oc??acian in 1952-1953-
Poland
1J.6
Czechoslovakia
43 0
Hungary
37.0
Rumania
23.3
Bulgaria
60.5
Albania
9.5
Great successes are also being achieved in ejecting capitalist elements
from wholesale and retail trade. In 1952, the u?oportion of the socialist
sector in wholesale and retail tra,;a was e;; foiluws: Poland,95.6 percent;
Czechoslovakia, 99 percent; Iiun,ary, p,;rs_.,t; Ruanie, 1. :;;rccr,t; Bulgaria,
99.3 percent; and Albania, 84.6 percent.
The relative proportion of the socialist sector's production in the na-
tional incoau: testifies to 1.1: aclaever:ents in the development of socialism
in the national ecoo-r; . The proportion of the socialist sector in the na-
tional incorw c' Poland as 115.5 percent in 1946, 65.7 percent in 1949, 75.0
percent In 1952; o. 0. .:cirocluva;aa. 5-..3 p,orcent in 1946,, 61.9 percent in 1949,
90 percent in 1952; of liung er. , 53.8 perc L1',t in 1.9119, 70 percent in 1950, 86.6
percent in 1952; of ii.s:nia, 52.1 percent in 1>43, 62.7 percent in 1950, 70
percent in 1952; ancf in Bulgaria, 39 percent in 19119, 68.6 percent in 195e, and
82.3 percent in 1952.
Enterprises of the socialist s_cl.or constitute the. :rinary source and
basis of the national income of Iolu..d, C_echoeluvakia, Hungary, Rumania, Bul-
garia, and Albania.
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STAT
The socialist structure is the directing and predominant structure in the
economy of the People's Democracies; industrialization, socialist reorganization
of the small producer's economy, and limitation and elimination of private capi-
talistic elements are being accomplished on its basis. The People's Democracies
arc rtegdfly.kvancing toward complete victory of the socialist structure over
the private capitalistic system.
Development Determined by Economic Law
In proportion to the growth and strengthening of the socialist structure
in the People's Democracies, the development of the national economy of these
countries is being determined to an ever ,treater degree by the fundamental
economic law of socialism. The fundamental economic law of socialism not only
directly affects the socialist structure of the national economy, but at the
same time exerts an indirect influence on shall producers, since their output
is, to an increasingly great extent, exchanged for the output of socialist in-
dustry.
Under conditions of transition, along with the new economic laws, the econ-
omy of the People's Democracies retains several old economic laws, although
their sphere of operation is limited. For example, in these countries the scope
of the operation of the law of cost encompasses all three social and economic
strata: private capital, small producers, and socialist economy, although the
extent of its operation is different in each one of. them. In the period of
transition the operation of the law of cost extends particularly to commodity
turnover, where to a certain extent it maintains its role as a regulator.
Under the present conditions in the People's Democracies, commodities be-
long not only to the state and to cooperatives, but also to private individuals,
i.e., to small producers and capitalist oWne-s. This means that such fac-
tors as cost, money, prices commodity production and commodity turn-
over may be, and are, utilized by the government of the People's
Democracies for ti:e conso.iidation and expansion of socialism, as well as by
capitalistic elements in their struggle against the expansion of socialism.
The economic policy of the government is directed toward limitation of capital-
istic elements in accordance with the aim of preraring the necessary conditions
for their futur:. liquidation. -
While developing trade with rural areas and expanding the contract system,
procurement, and supply, the state concentrates in its hands a constantly in-
?ee asitig amount of agricultural commoditios which provides it with an opportu-
nity to _;aprove its supplyin- operations with respect to food and industrial raw
materials. By all these methods, the doverneents of the People's Democracies
exert their influence on prices, and restrict and eliminate the negative effects
of the law of cost.
Historical peculiarities of the People's Democracies must be considered in
carrying out socialist industrialization of their economy. Whereas the USSR
carried out socialist industrialization completely independently and under con-
ditions of complet6'* chpitali st encirclement, the 2 ~opl='s Democracies are carry-
ing out socialist industrialization under considerably more favorable nterna-
tional conditions, and with the assistance of the USSR.
The People's Democracies receive technical and financial aid from the USSR
on advantageous and profitable terms. Whereas the USSR received very few loans
from other countries, and was obliged to pay high interest rates (up to 20 per-
cent) on those few small loans which it did receive, the People's Democracies
receive from the USSR large loans under exceptionally favorable conditions, at
an interest rate of one percent per annum. The scientific and technical aid and
the loans extended by the USSR play an enormous part in the industrialization of
the People's Democracies.
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Anus:- r historical peculiarity in the development of the People's Democ-
racies along c-ialist lines lies in the fact that the building of socialism
is being carried out on the basic of a growing international socialist divi-
sion of labor within the socialist camp. The People's Democracies are spared
the task, which is beyond their capabilities, of each developing all the branches
of heavy industry. Each of the People's Democracies, while carrying out
industrialization, can concentrate on the development of those branches of in-
dustry for which conditions seem most favorable and which are of the greatest
importance to the national economy of a given country as well as the socialist
camp as a whole.
Socialist Camp is Powerful Cooperative
The socialist camp represents an enormous and powerful cooperative with
a correct socialist division of labor, making it actually possible to coordi-
nate the national economic plans of all the countries belonging to it. The
industrial base of each country is a component part of the whole industrial
base of the socialist camp. All these peculiarities of socialist industriali-
zation of the People's Democracies substantially facilitate and accelerate
the rate of economic socialization in these countries.
As is well known, in the past all the People's Democracies, except Czech-
oslovakia, were backward agrarian-industrial or agrarian countries. Poland,
Hungary, and Rumania were agrarian-industrial countries. Bulgaria was an agra-
rian country with a weakly developed industry. Economically, Albania was
the most backward, with large survivals of a patriarchial order. The'indus-
trial development of Czechoslovakia was one-sided,-and one of the most impor-
tant provinces of the republic, Slovakia, remained backward and agrarian.
World War II and the occupation of.the Central aid' Southeastern European coun-
tries by the Germ4ze.res0lted in an enormous repression of the economy of these
countries-+'
The first national economic plans of the People's Democracies were de-
signed to restore the war-damaged economy. However, this was not to be a
simple restoration of prewar economy; various measures for the reconstruction
of the economy were designed to simultaneously convert it into a socialist
order. The majority of the People's Democracies initiated the first national
economic plans in 1947 when the 3-year plans of Poland (1947-1949) and Hungary
(1 August 1947-1 August 1950) and the 2-year plans of Czechoslovakia (1947-
1948) and Bulgaria (1947-1948) were started. In Rumania the first one-year
plan was instituted in 1949 and in Albania the first 2-year plan was begun
in 1950, Because of the enthusiasm of the working class, the leadership of
the,Comnunist and workers' parties, the development of socialist competition,
and considerable aid from the USSR, the first national economic plans in the
'People's Democracies were successfully fulfilled.
During the reconstruction period (1946-1949), large strides were made
in eliminating the technical and economic backwardness of the People's Democ-
racies. In all of these countries, industry was not simply reconstructed, but,
as a rule, was expanded considerably beyond the prewar level of industrial pro-
duction, especially in heavy industry. At the end of the reconstruction
period, industrial production in Poland exceeded the prewar level 75 percent;
in Czechoslovakia, 10 percent; in Hungary, 37.5 percent; in Bulgaria, 85 per-
cent; in Rumania, 60 percent; and in Albania by 4.7 times.
As a result of the successfr" fulfillment ;f the plans, vitally impor-
tant iroblems in the reconstruction of industry and agriculture and the ex-
pansion of the socialist sector of the national economy were solved, and a
substantial increase in the material and cultural level of the life of the
workers was achieved.
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STAT
rrnomic and Political --- --- 1-". ?`"""" 'n==' necessary
F conditions for the duvclep nt of Lu national economy
on the basis of long-te:?m 5- end
In 1949, the workers of Bulgaria and Cscchoslova%ia been to put into
eirr?'. t1:eIr.t n:arIl.aic;. 2ince 1950, a u-,;:ar )h 1' Las been in effect in
Poland, while Hungary iu:;Li tut_i its 5-;ear p)-an in 1950. Rumania and Albania
have had 5-year plans in effect since 19 .
Plans Founded on V rxi:; LcninisL T:eon
In the People's R:nyocracies, the national economic Flans are founded on
the basis of Marxist-Leninist theory and broad utilization of Soviet experi-
ence in socialist planning, and reflect the d--rands of the basic economic law
of planned, Proportional develupment of the national economy. The planning
principle in the People's Den:ocraciac, !: ,;ever, rust contend with bitter re-
d Stance from I:outile cla:: s force;., headof by private petty bour,,cois property
owners. This creates