Military Industry Under Khrushchev
Throughout his years of leadership, Khrushchev attempted to carry out reform in a range of fields. Some innovations by Khrushchev proved counterproductive. His plans for growing maize and increasing meat and dairy production failed miserably, and his reorganization of collective farms into larger units produced confusion in the countryside. In his dramatic virgin land campaign in the mid-1950s, Khrushchev opened to farming vast tracts of land in the northern part of the Kazakh Republic and neighboring areas of the Russian Republic. These new farmlands turned out to be susceptible to droughts, but in some years they produced excellent harvests.
As 1956 approached, the sixth five-year plan for 1956-1960 was announced, setting its targets. In 1956 directives of the XX Congress of the Communist Party of the USSR defined the tasks for the sixth five-year plan.
Khrushchev's reforms in industry and administrative organization created even greater problems. In February 1957 Khrushchev made the first proposal for industrial reorganization. He proposed to replace administration from Moscow with administration by region. He also proposed to strengthen the functions of centralized planning and indirect control, by statistical methods, policymaking, and so forth. In some ways this is one of those Russian enigmas -- to decentralize, but to further centralize control.
Before these proposals were adopted, various Before these proposals were adopted, various production ministries exercised tight control from Moscow. Reports on every facet of plant operation were required to be sent directly to Moscow. No doubt, such requirements led to many illegal practices, falsification of records, and stifling of initiative. The control of an entire industry from Moscow also caused difficulties in maintaining procurement and distribution relationships between industrial plants under separate ministries, even though they were located in the same area and had natural relationships. Decrees which classified failures to deliver items necessary for production schedules between plants as criminal tend to strengthen the view that the system was having difficulties.
In a politically motivated move to weaken the central state bureaucracy, in 1957 Khrushchev did away with the industrial ministries in Moscow and replaced them with regional economic councils. At a stroke of the pen, 25 industrial ministries were abolished and national economy councils were established at all levels. The sixth 5-year plan was cancelled in 1957, and the new goals for the 7-year plan, which would govern the economy from 1959 to 1965, were not announced until July of 1958. Although Khrushchev intended these economic councils to be more responsive to local needs, the decentralization of industry led to disruption and inefficiency.
After the Twentieth Party Congress, Khrushchev continued to expand his influence, although he still faced opposition. Khrushchev's rivals in the Presidium, spurred by reversals in Soviet foreign policy in Eastern Europe in 1956, potentially threatening economic reforms, and the de-Stalinization campaign, united to vote him out of office in June 1957. Khrushchev, however, demanded that the question be put to the Central Committee of the CPSU, where he enjoyed strong support. The Central Committee overturned the Presidium's decision and expelled Khrushchev's opponents (Malenkov, Molotov, and Kaganovich).
When Khrushchev presented his proposals on economic reorganization and decentralization in 1957, he exempted certain institutions from the wholesale dissolution of ministries that was to take place. "The following industrial and construction ministries shall be preserved: Ministry of Aviation Industry, Ministry of Ship-building Industry. Ministry of Radio Industry, Ministry of Chemical Industry, Ministry of Medium Machine-building, and Ministry of Transport Construction. It is proposed that the Ministry of Defense Industry be merged with the Ministry of General Machine Building..." [Pravda, 8 May 1957]
This exception to the general plan was interpreted by some as a concession to the military authorities, particularly Zhukov, who insisted that the industrial suppliers of defense goods retain their ministerial characteristics, that is centralized control and extensive vertical integration. It was especially the latter feature of the old system that Khrushchev wanted to destroy, for the tendency of the ministries to acquire direct administrative control over all their supplies was, if a natural outgrowth of the mania for plan fulfillment, a woefully inefficient procedure.
Khrushchev's remarks make it clear, however, that he was trying to limit this concession to form while imposing his new scheme in substance. "The above ministries should be preserved in order to effect a more even transition to the new type of management [decentralized], without relaxing centralized supervision over the development of these branches of our industry, while carrying out our reorganization of the management of industry and construction. However, these ministries should be fundamentally reorganized. They must plan the development of their respective industries and ensure the requisite technical level of production as well as draw up plans for: research and design and supervise their execution. These ministries must be relieved of direct management of enterprises concerned, and in this connection their central staffs must be considerably reduced."
The law enacting the proposals provided that "enterprises and organizations which fall under the ail-Union ministries of the Aviation Industry, Defense Industry, Radio Industry..." be transferred "to the direct jurisdiction of the appropriate economic councils of the economic administrative regions," in effect to the sovnarkhozi, "according to a list approved by the USSR Council of Ministers." The functions of these truncated ministries were specified as "planning ... and seeing to high technical standards..." but it was provided that these functions "be carried out by the ministries through the economic councils..." [Pravda, 11 May 1957] If this language had any meaning, these ministries became state committees in all but name and were subject to the same decentralization that was applied throughout the economy. It should be noted, however, that the miniterial reorganization did not apply to the Ministry of Medium Machine-building, which deals with atomic energy, even though Khrushchev had specified it in his original proposal. Evidently he had been persuaded to leave this critical industry centralized and insulated from the rest of the economy, i.e., self-sufficient regarding supplies.
Khrushchev moved to consolidate his power further in the ensuring months. In October 1957 he removed Marshal Zhukov (who had helped Khrushchev squelch the "anti-party group") from the office of defense minister, presumably because he feared Zhukov's influence in the armed forces. In December 1957, these defense industry ministries specified, except for Medium Machine-building, were formally converted to state committees under the Council of Ministries. This completion of the reorganization occurred, significantly, after Zhukov had been deposed.
The point of the reorganization was to break up the multitude of vast ministerial empires that had grown up under Stalin. Under pressure for plan fulfillment, each ministry had sought to acquire administrative control over its material inputs so as not to be caught short by some bind in the plan or supply system. As is well known, the result was that plant X of a given ministry would order bolts from thousands of miles away through intra-ministrial supply even though plant Y across the street but under a different ministry had a surplus of bolts. Defense industries, which were under the greatest pressure for results, were probably most prone to this disorder.
Khrushchev felt that the dismantling of these hierarchies and the improvement of inter-branch communication would improve efficiency, in defense industries as well as in other branches. Those who objected felt that if the defense industries were decentralized and subjected to the vagaries of supply prevalent in the economy at large, weapons output would suffer; if the old system was inefficient, at least it was productive, i.e., the goods got produced.
Under the new system the state committees were supposed to have no direct administrative responsibilities -- those devolved upon the sovnarkhozi -- but were to oversee technological innovation and promote branch-line efficiency. The non-administrative character of the committees was underscored by their names: Aviation Technology, for example. But the fulfillment of these functions required corresponding powers and, consequently, administrative authority began almost immediately to filter back to the center, to the state committees. Hence, arose the frequent complaints about chairmen of state committees who acted like the ministers of old. Since the urgency of output in the defense industries was no less than before, it proved most difficult to subordinate them to the new system as had been planned. Apparently, they continued to manifest vertical integration and other inefficiencies characteristic of the old system.
It was very likely this feature of the defense industry to which Khrushchev alluded in April 1963 when he complained: "There are considerable reserves for increasing production even in the defense industry. But poor use is being made of these reserves because defense plant production is closed, and this means that any shortcomings and faults in the work of these enterprises are also closed to criticism. (Stir in the hall. Applause.) The defense industry is coping successfully with its tasks of creating and producing modern armaments. But these tasks could be solved more successfully with less expenditure." [Pravda, 24 April 1963]
Khrushchev did not retreat formally from the system adopted in 1957. In 1963, even the Ministry of Medium Machine-building was abolished and replaced by the USSR State Production Committee for Medium Machine-building.
In October 1964, while Khrushchev was vacationing in Crimea, the Presidium voted him out of office and refused to permit him to take his case to the Central Committee. Khrushchev retired as a private citizen after his successors denounced him for his "hare-brained schemes, half-baked conclusions, and hasty decisions." Yet along with his failed policies, Khrushchev must also be remembered for his public disavowal of Stalinism and the cult of personality.
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