Military Industry Under Stalin
The Bolsheviks, who assumed power in late 1917, sought to mold a socialist society from the ruins of old tsarist Russia. This goal was both ambitious and vague; Karl Marx and Friedrich Engels, who developed the Marxist critique of existing societies, had provided no blueprints for specific economic policies and targets. Chaotic conditions produced by World War I and subsequent struggles during the Civil War (1918-21) made pursuit of coherent policies difficult in any case. The economic policies initially adopted by the regime were a mixture of principle and expedience.
Soon after seizing power, the Bolsheviks published decrees nationalizing the land, most industry (all enterprises employing more than five workers), foreign trade, and banking. At the same time, for tactical reasons, the government acquiesced in the peasants' seizure of land, but the new leaders considered the resulting fragmented parcels of privately owned land to be inefficient.
Beginning in 1918, the government made vigorous but somewhat haphazard efforts to shape and control the country's economy under a policy of War Communism. But in 1920, agricultural output had attained only half the pre-war level, foreign trade had virtually ceased, and industrial production had fallen to a small fraction of its pre-war quantity. Such factors as the disastrous harvest of 1920, major military actions and expenditures by the Red Army, and general wartime destruction and upheaval exacerbated the economy's problems.
In 1921 Vladimir I. Lenin called a temporary retreat from application of the ideological requirements of Marxism-Leninism. His New Economic Policy (NEP) permitted some private enterprise, especially in agriculture, light industry, services, and internal trade, to restore prewar economic strength. The nationalization of heavy industry, transportation, foreign trade, and banking that had occurred under war communism remained in effect.
The Plan for the Electrification of the R.S.F.S.R., the report of GOELRO (the State Commission for the Electrification of Russia) was presented to the Eighth Congress of Soviets, and published in December 1920. On 24 April 1920, GOELRO issued its Bulletin No. 1, containing a detailed program of works. Lenin proclaimed ""Communism is the Power of Soviets plus the electrification of the whole country". Electrification was to be for Lenin what railroads had been for Sergei Witte in the 1890s, a critical technology employed by state power to drive industrial growth. The resolution written by Lenin and accepted by the Congress expressed the confidence that the working people and peasants "will spare no effort and make all necessary sacrifices for the realisation of the GOELRO Plan in Russia at all costs and in spite of all obstacles". The GOELRO plan implementation ensured the national economy's industrialization. As a result the Soviet Union became a leading world power. Vladimir llyich Lenin died 21 January 1924.
In the late 1920s, Stalin abandoned NEP in favor of centralized planning, which was modeled on the project sponsored by Lenin in the early 1920s that had greatly increased the generation of electricity. Stalin sought to rapidly transform the Soviet Union from a predominantly agricultural country into a modern industrial power. He and other leaders argued that by becoming a strong centrally planned industrial power, the country could protect itself militarily from hostile outside intervention and economically from the booms and slumps characteristic of capitalism.
To some extent, Stalin chose to advocate accelerated economic development at this point as a political maneuver to eliminate rivals within the party. Because Bukharin and some other party members would not give up the gradualistic NEP in favor of radical development, Stalin branded them as "right-wing deviationists" and used the party organization to remove them from influential positions in 1929 and 1930. Yet Stalin's break with NEP also revealed that his doctrine of building "socialism in one country" paralleled the line that Trotsky had originally supported early in the 1920s.
Under Stalin, the First Five-Year Plan began in 1928. This planning system brought spectacular industrial growth, especially in capital investment. More important, it laid the foundation for centralized industrial planning, which continued into the late 1980s. Heavy industry received much greater investment than light industry throughout the Stalin period. Although occasional plans emphasized consumer goods more strongly, considerations of national security usually militated against such changes. Marxism supplied no basis for Stalin's model of a planned economy, although the centralized economic controls of the war communism years seemingly furnished a Leninist precedent. Nonetheless, between 1927 and 1929 the State Planning Commission (Gosplan) worked out the First Five-Year Plan for intensive economic growth; Stalin began to implement this plan -- his "revolution from above" -- in 1928.
Stalin's First Five-Year Plan, adopted by the party in 1928, called for rapid industrialization of the economy, with an emphasis on heavy industry. The First Five-Year Plan focused rather narrowly upon expansion of heavy industry and collectivization of agriculture. Stalin's decision to carry out rapid industrialization made capital-intensive techniques necessary. International loans to build the economy were unavailable, both because the new government had repudiated the international debts of the tsarist regime and because industrialized countries, the potential lenders, were themselves coping with the onset of the Great Depression in the early 1930s. It set goals that were unrealistic -- a 250 percent increase in overall industrial development and a 330 percent expansion in heavy industry alone. All industry and services were nationalized, managers were given predetermined output quotas by central planners, and trade unions were converted into mechanisms for increasing worker productivity. Many new industrial centers were developed, particularly in the Ural Mountains, and thousands of new plants were built throughout the country. But because Stalin insisted on unrealistic production targets, serious problems soon arose. With the greatest share of investment put into heavy industry, widespread shortages of consumer goods occurred.
The First Five-Year Plan called for transforming Soviet agriculture from predominantly individual farms into a system of large state collective farms. Stalin chose to fund the industrialization effort through internal savings and investment. He singled out the agricultural sector in particular as a source of capital accumulation. The Communist regime believed that collectivization would improve agricultural productivity and would produce grain reserves sufficiently large to feed the growing urban labor force. The anticipated surplus was to pay for industrialization. Collectivization was further expected to free many peasants for industrial work in the cities and to enable the party to extend its political dominance over the remaining peasantry. In fact, forced collectivization resulted in much hardship for the rural population and lower productivity. By 1932 about 60 percent of peasant households had joined state farms or collective farms. During the same period, however, total agricultural output declined by 23 percent, according to official statistics. Heavy industry exceeded its targets in many areas during the plan period. But other industries, such as chemicals, textiles, and housing and consumer goods and services, performed poorly. Consumption per person dropped, contrary to plan the planned rates pf consumption.
After the First Five-Year Plan, planning was completely centralized in the all-union ministries. In day-to-day operations, this system consistently delayed inter-ministry cooperation in such matters as equipment delivery and construction planning. An example was electric power plant construction. Planners relied on timely delivery of turbines from a machine plant, whose planners in turn relied on timely delivery of semifinished rolled and shaped metal pieces from a metallurgical combine. Any change in specifications or quantities required approval by all the ministries and intermediate planning bodies in the power, machine, and metallurgical industries--a formidable task under the best of circumstances.
By 1932 Stalin realized that both the economy and society were seriously overstrained. Although industry failed to meet its production targets and agriculture actually lost ground in comparison with 1928 yields, Stalin declared that the First Five-Year Plan had successfully met its goals in four years. He then proceeded to set more realistic goals. Under the Second Five-Year Plan (1933-37), the state devoted attention to consumer goods, and the factories built during the first plan helped increase industrial output in general. The Third Five-Year Plan, begun in 1938, produced poorer results because of a sudden shift of emphasis to armaments production in response to the worsening international climate. All in all, however, the Soviet economy had become industrialized by the end of the 1930s. Agriculture, which had been exploited to finance the industrialization drive, continued to show poor returns throughout the decade.
The Second Five-Year Plan (1933-37) continued the primary emphasis on heavy industry. By 1932 Stalin realized that both the economy and society were seriously overstrained. Although industry failed to meet its production targets and agriculture actually lost ground in comparison with 1928 yields, Stalin declared that the First Five-Year Plan had successfully met its goals in four years. He then proceeded to set more realistic goals. Under the Second Five-Year Plan (1933-37), the state devoted attention to consumer goods, and the factories built during the first plan helped increase industrial output in general. By the late 1930s, however, collectivized farms were performing somewhat better (after reaching a nadir during the period 1931-34). In 1935 a new law permitted individual peasants to have private plots, the produce of which they could sell on the open market. According to official statistics, during the Second Five-Year Plan gross agricultural production increased by just under 54 percent. In contrast, gross industrial production more than doubled.
The Third Five-Year Plan (1938-41) projected further rapid industrial growth. The Third Five-Year Plan, begun in 1938, produced poorer results because of a sudden shift of emphasis to armaments production in response to the worsening international climate. All in all, however, the Soviet economy had become industrialized by the end of the 1930s. The government soon altered the plan, however, in an attempt to meet the growing danger of war, devoting increasing amounts of resources to armaments. When the country went to war with Finland (1939-40), serious disruptions occurred in the Soviet transportation system. Nonetheless, during these years the economy benefited from the absorption of Estonia, Latvia, Lithuania, Bessarabia, and the eastern part of Poland and from the growing trade with Germany that resulted from the 1939 Nazi-Soviet Nonaggression Pact.
After the German invasion of 1941, damage to the economy in both human and material terms was devastating. The regime virtually abandoned the Third Five-Year Plan as it sought to mobilize human and material resources for the war effort. During World War II, an increasing proportion of products and materials were allocated centrally, and Gosplan took over more of the balancing and allocation plans. Wartime economic plans did not officially replace the traditional planning process but were simply superimposed as needed to cover activities and goods essential to the war effort.
Industry was diverted and displaced by World War II, and many enterprises moved permanently eastward, into or beyond the Ural Mountains. Postwar recovery was rapid as a result of the massive application of manpower and funds.
At the end of World War II, while the western nations demobilized to a great extent, not only did the Russians not demobilize but they embarked on a major program of research and development and an all-out strengthening of their armed forces. Soviet military research and development continued to take precedent even over the most modest peacetime requirements. The technological and economic development ignored the need for economy in consumer goods as much as they could.
Immediately after the Great Patriotic War, the defense industry of the Soviet Union was consolidated under three ministries: the Ministry of Shipbuilding, the Ministry of Aviation Industry, and the Ministry of Armaments.
The Fourth Five-Year Plan began in 1945. During the early years of the period, attention focused on repair and rebuilding, with minimal construction of new facilities. Repair work proceeded briskly, with spectacular results. The country received no substantial aid for postwar reconstruction, Stalin having refused to consider proposals for participation in the Marshall Plan in 1947. Hungary, Bulgaria, Romania, and especially defeated Germany made reparations payments to the Soviet Union, however, consisting in large part of equipment and industrial materials. Entire German factories and their workers were brought to the Soviet Union to train Soviet citizens in specialized work processes. Although the government never published definitive statistics, an authoritative Western assessment estimated the value of reparations at an average of 5 billion rubles per year between 1945 and 1956. The exertions of the country's inhabitants, however, coupled with ambitious economic strategies, proved most crucial for the recovery.
During the war years, the government had transferred substantial numbers of industrial enterprises from threatened western areas to Asian regions of the country. After the war, these facilities remained at their new sites as part of an effort to promote economic development. These locations had the advantage of being near raw materials and energy sources. The government also deemed it strategically sound to have the important installations of the country distributed among several regions.
Like earlier plans, the Fourth Five-Year Plan stressed heavy industry and transportation. The economy met most of the targets in heavy industry. The performance of agriculture again lagged behind industry. Western observers believed that factors in agriculture's poor performance included a paucity of investment, enforcement of a strict quota system for delivery of agricultural products to the state, and tenuous linkage between wages and production, which deprived farmers of incentives. Housing construction, community services, and other consumer items also lagged noticeably. During the final years of the plan, Stalin launched several grandiose projects, including building canals and hydroelectric plants and establishing tree plantations in the Armenian, Azerbaydzhan, Georgian, and Ukrainian republics and in the Volga River area of the Russian Republic to shield land from drying winds. Collectively, these efforts were referred to as "the Stalin plan for the transformation of nature."
In 1946 Andrei Zhdanov, a close associate of Stalin, helped launch an ideological campaign designed to demonstrate the superiority of socialism over capitalism in all fields. This campaign, colloquially known as the Zhdanovshchina ("era of Zhdanov"), attacked writers, composers, economists, historians, and scientists whose work allegedly manifested Western influence. Although Zhdanov died in 1948, the cultural purge continued for several years afterward, stifling Soviet intellectual development. Another campaign, related to the Zhdanovshchina, lauded the real or purported achievements of past and present Russian inventors and scientists. In this intellectual climate, the genetic theories of biologist Trofim D. Lysenko, which were supposedly derived from Marxist principles but lacked scientific bases, were imposed upon Soviet science to the detriment of research and agricultural development. The anticosmopolitan trends of these years adversely affected Jewish cultural and scientific figures in particular. In general, a pronounced sense of Russian nationalism, as opposed to socialist consciousness, pervaded Soviet society.
Throughout the Stalin era, the pace of industrial growth was forced. On those occasions when shortages developed in heavy industry and endangered plan fulfillment, the government simply shifted resources from agriculture, light industry, and other sectors. The situation of the consumer improved little during the Stalin years as a whole. Major declines in real household consumption occurred during the early 1930s and in the war years. Although living standards had rebounded after reaching a low point at the end of World War II, by 1950 real household consumption had climbed to a level only one-tenth higher than that of 1928. Judged by modern West European standards, the clothing, housing, social services, and diet of the people left much to be desired.
When Stalin died on 05 March 1953 (under circumstances that are still unclear), his inner circle, which had feared him for years, secretly rejoiced. After Stalin's death, when there was more confusion than normal in the Soviet Union, the dominant element, probably, for a period of about two years, was the technicians. Malenkov, Kaganovitch, Pervukin, and many others in high places were all engineers and practical managers of industrial plants and trusts.
Stalin died without naming an heir, and none of his associates had the power to immediately claim supreme leadership. The deceased dictator's colleagues initially tried to rule jointly through a collective leadership, with Malenkov holding the top positions of prime minister (chairman of the Council of Ministers; the name changed from Council of People's Commissars in 1946) and general secretary (the latter office for only two weeks). The arrangement was first challenged in 1953 when Beria, the powerful head of the security forces, plotted a coup. Beria's associates in the Presidium, however, ordered Marshal Zhukov to arrest him, and he was secretly executed.
The Fifth Five-Year Plan (1951-55) as a whole reflected Stalin's preoccupation with heavy industry and transportation, the more so because no single leader firmly controlled policy after Stalin's death. In many respects, economic performance pleased the leadership during the period. According to government statistics (considered by Western observers to be somewhat inflated), the economy met most growth targets, despite the allocation of resources to rearmament during the Korean War (1950-53). National income increased 71 percent during the plan period. As in previous plans, heavy industry received a major share of investment funds.
After Stalin's death, the Ministry of Armaments and Ministry of Aviation Industry were consolidated for a time under the leadership of Dmitriy Fyodorovich Ustinov, becoming the Ministry of Defense Industry, but within a few years [by 1957] the Ministry of Aviation Industry was once again an independent entity. Also in March 1953, four of the eight existing engineering Ministries were amalgamated into one grossly inflated Ministry of Machine Building. In 1953 the Ministry of Medium Machine Building was established to develop nuclear weapons and nuclear power. In 1954 the Ministry of Radio Industry was established, with responsibility for developing air defense radars and related electronic systems.
During the final years of the Fifth Five-Year Plan, however, party leaders began to express concern about the dearth of consumer goods, housing, and services, as they reassessed traditional priorities. The new prime minister, Georgii M. Malenkov, sponsored a revision of the Fifth Five-Year Plan, reducing expenditures for heavy industry and the military somewhat in order to satisfy consumer demand. The newly appointed first secretary of the party, Khrushchev, launched a program to bring under cultivation extensive tracts of virgin land in southwestern Siberia and the Kazakh Republic to bolster fodder and livestock production. Although Malenkov lost his position as prime minister in 1955, largely as a result of opposition to his economic policies, the austere approach of the Stalin era was never revived.
At the Twentieth Party Congress, held in February 1956, Khrushchev further advanced his position within the party by denouncing Stalin's crimes in a dramatic "secret speech." Khrushchev revealed that Stalin had arbitrarily liquidated thousands of party members and military leaders (thereby contributing to the initial Soviet defeats in World War II) and had established a pernicious cult of personality.
By 1957 military and related ministries included:
- Ministry of Defense Industry
- Ministry of General Machine Building
- Ministry of Medium Machine Building
- Ministry of Machine Building and Means of Automation
- Ministry of Machine Building and Instrument Construction
- Ministry of Machine Tool Building and Instruments Industry
- Ministry of Heavy Engineering
- Ministry of Chemical Industry
- Ministry of Aviation Industry
- Ministry of Shipbuilding
- Ministry of Automobile Industry
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