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designed for the long run"

Five-Year Plan

1st Five-Year Plan19281932
2nd Five-Year Plan1933 1937
3rd Five-Year Plan1938 1941
4th Five-Year Plan1945 1950
5th Five-Year Plan1951 1955
6th Five-Year Plan1956 1957
Seven-Year Plan1957 1965
8th Five-Year Plan1966 1970
9th Five-Year Plan1971 1975
10th Five-Year Plan1976 1980
11th Five-Year Plan1981 1985
12th Five-Year Plan1986 1990
13th Five-Year Plan1991 1995
The five-year plan provided continuity and direction by integrating the yearly plans into a longer time frame. Although the five-year plan was duly enacted into law, it contained a series of guidelines rather than a set of direct orders. Periods covered by the five-year plans coincided with those covered by the party congresses. At each congress, the party leadership presented the targets for the next five-year plan. Thus each plan had the approval of the most authoritative body of the country's leading political institution.

From its first years, government in the Soviet Union was based on the one-party rule of the Communists, as the Bolsheviks called themselves beginning March 1918. After unsuccessfully attempting to centralize the economy during the Civil War, the Soviet government permitted some private enterprise to coexist with nationalized industry in the 1920s. Debate over the future of the economy provided the background for Soviet leaders to contend for power in the years after Lenin's death in 1924. By gradually consolidating influence and isolating his rivals within the party, Joseph V. Stalin became the sole leader of the Soviet Union by the end of the 1920s.

In 1928 Stalin introduced the First Five-Year Plan for building a socialist economy. In industry, the state assumed control over all existing enterprises and undertook an intensive program of industrialization; in agriculture, the state appropriated the peasants' property to establish collective farms. These sweeping economic innovations produced widespread misery, and millions of peasants perished during forced collectivization. Social upheaval continued in the mid- 1930s when Stalin began a purge of the party; out of this purge grew a campaign of terror that led to the execution or imprisonment of untold millions of people from all walks of life. Yet despite this turmoil, the Soviet Union developed a powerful industrial economy in the years before World War II.

The First Five-Year Plan called for rapid industrialization of the economy, with particular growth in heavy industry. The economy was centralized: small-scale industry and services were nationalized, managers strove to fulfill Gosplan's output quotas, and the trade unions were converted into mechanisms for increasing worker productivity. 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, and inflation grew.

To satisfy the state's need for increased food supplies, the First Five-Year Plan called for the organization of the peasantry into collective units that the authorities could easily control. This collectivization program entailed compounding the peasants' lands and animals into collective farms and state farms and restricting the peasants' movements from these farms, thus in effect reintroducing a kind of serfdom into the countryside.

Five Year PlanAlthough the program was designed to affect all peasants, Stalin in particular sought to liquidate the wealthiest peasants, the kulaks. Generally speaking, the kulaks were only marginally better off than other peasants, but the party claimed that the kulaks ensnared the rest of the peasantry in capitalistic relationships. Yet collectivization met widespread resistance not only from kulaks but from poorer peasants as well, and a desperate struggle of the peasantry against the authorities ensued. Peasants slaughtered their cows and pigs rather than turn them over to the collective farms, with the result that livestock resources remained below the 1929 level for years afterward. The state in turn forcibly collectivized reluctant peasants and deported kulaks and active rebels to Siberia.

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 Seventeenth Party Congress in 1934 praised collectivization and the successes of the First Five-Year Plan (1928-32), and it confirmed Stalin as head of the party and the country.

The Third Five-Year Plan (1938-41) projected further rapid industrial growth. 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. 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.

Five Year PlanAfter 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.

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. 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.

Although Stalin died in 1953, the Fifth Five-Year Plan (1951-55) as a whole reflected his 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. 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.

An ambitious Sixth Five-Year Plan was launched in 1956. After initial revision, prompted at least in part by political considerations, the regime abandoned the plan in 1957 to make way for a seven-year plan (subsequently reduced to a five-year plan) that focused particularly on coal and oil production and the chemical industry. Khrushchev, who became principal leader after 1956, took particular interest in these areas of production. The seven-year plan provided substantial investment fundsover 40 percent of the totalfor the eastern areas of the country. Khrushchev also sponsored reforms to encourage production on the private plots of collective farmers.

During the seven-year plan, industrial progress was substantial, and production of consumer durables also grew. The national income increased 58 percent, according to official statistics. Gross industrial production rose by 84 percent, with producer goods up 96 percent and consumer goods up 60 percent. Growth rates slowed noticeably during the final years of the plan, however. Party leaders blamed Khrushchev's bungling efforts to reform the centralized planning system and his tendency to overemphasize programs in one economic sector (such as his favorite, the chemical industry) at the expense of other sectors.

Five Year PlanAgriculture's performance proved disappointing in the 1960s; adverse weather in 1963 and 1965, as well as Khrushchev's interference and policy reversals, which confused and discouraged the peasants' work on their private plots, were contributing factors. Khrushchev's economic policies were a significant, although not sole, reason for his dismissal in October 1964.

The Eighth Five-Year Plan (1966-70), under the leadership of Khrushchev's successor as party head, Brezhnev, chalked up respectable growth statistics: national income increased 41 percent and industrial production 50 percent, according to government statistics. Growth in producer goods (51 percent) outpaced that in consumer goods (49 percent) only slightly, reflecting planners' growing concern about the plight of consumers. During the late 1960s, Brezhnev raised procurement prices for agricultural products, while holding constant retail prices for consumers. Agriculture thus became a net burden on the rest of the economy. Although production increased, the sector's performance remained unsatisfactory. The country had to import increasing amounts of grain from the West.

In the Ninth Five-Year Plan (1971-75), a slowdown in virtually all sectors became apparent. National income grew only 28 percent during the period, and gross industrial production increased by 43 percent. The 37 percent growth rate for the production of consumer goods was well below the planned target of 45.6 percent. Problems in agriculture grew more acute during the period. The gap between supply and demand increased, especially for fodder.

Results for the Tenth Five-Year Plan (1976-80) were even more disappointing. National income increased only 20 percent and gross industrial production only 24 percent. The production of consumer goods grew a meager 21 percent. Western observers rated the growth of the country's gross national product (GNP) at less than 2 percent in the late 1970s.

For Soviet leaders, the modest growth rates were a perplexing problem. The ability to maintain impressive growth rates while providing full employment and economic security for citizens and an equitable distribution of wealth had always been one area in which supporters of the Soviet system had argued that it was superior. Soviet leaders could point to many achievements; by virtually any standard, the gap between the Soviet economy and the economies of other major industrialized powers had narrowed during the years of Soviet rule. Throughout the early decades of the economy's development, plans had emphasized large, quick additions of labor, capital, and materials to achieve rapid, "extensive" growth.

By the 1970s, however, prospects for extensive growth were limited. During the 1960s, the Soviet Union had shown the fastest growth in employment of all major industrial countries, and the Soviet Union together with Japan had boasted the most rapid growth of fixed capital stock. Yet Soviet growth rates in productivity of both labor and capital had been the lowest. In the 1970s, the labor force grew more slowly. Drawing on surplus rural labor was no longer possible, and the participation of women in the work force was already extensive. Furthermore, the natural resources required for extensive growth lay in areas increasingly difficult, and expensive, to reach. In the less-developed eastern regions of the country, development costs exceeded those in the European parts by 30 percent to 100 percent. In the more developed areas of the country, the slow rate at which fixed assets were retired was becoming a major problem; fixed assets remained in service on average twice as long as in Western economies, reducing overall productivity. Nevertheless, in the late 1970s some Western analysts estimated that the Soviet Union had the world's second largest economy, and its GNP continued to grow in the 1980s.

Five Year PlanThe ninth, tenth, and eleventh five-year plans (1971-85) provided for stimulating further economic development and settlement in Siberia and the Soviet Far East. Under Gorbachev, reports indicated a possible change in emphasis to stress modernization and intensification of production by using existing capacity in the European portion.

The Soviet Union by the 1970s found it increasingly difficult to maintain the high rates of growth in the industrial sector that it had sustained in earlier years. Increasingly large investment and labor inputs were required for growth, but these inputs were becoming more difficult to obtain. Although the planned goals of the five-year plans of the 1970s had been scaled down from previous plans, the targets remained largely unmet. The industrial shortfalls were felt most sharply in the sphere of consumer goods, where the public steadily demanded improved quality and increased quantity.

The standard of living in the Soviet Union presented a problem to the Brezhnev leadership after improvements made in the late 1960s gradually leveled off at a position well below that of many Western industrial (and some East European) countries. Although certain goods and appliances became more accessible during the 1960s and 1970s, improvements in housing and food supply were slight. Shortages of consumer goods abetted pilferage of government property and growth of the black market.

After Gorbachev's accession to power, the leadership promulgated a new series of telecommunications and computerization goals. Some of those efforts had already been incorporated into the Twelfth Five-Year Plan (1986-90). They included a universal implementation of computers and data bases throughout the economy and an all-union computer modernization and training program.

Concern about productivity characterized the Eleventh Five-Year Plan (1981-85). The targets were rather modest, and planners reduced even those after the first year of the period. Achievements remained below target. The plan period as a whole produced a modest growth rate of 3 to 4 percent per year, according to official statistics. National income increased only 17 percent. Total industrial output grew by 20 percent, with the production of consumer goods increasing at a marginally higher rate than producer goods. Agricultural output registered a meager 11.6 percent gain.

Over the years, the centralized system had produced prices with little relationship either to the real costs of the products or to their price on the world market. For several decades, the government kept the price of basic goods, such as essential foods, housing, and transportation, artificially low, regardless of actual production costs. As agricultural costs had increased, for example, subsidies to the agricultural sector had grown, but retail prices remained stable.

When Gorbachev attained power in 1985, most Western analysts were convinced that Soviet economic performance would not improve significantly during the remainder of the 1980s. "Intensification" alone seemed unlikely to yield important immediate results. Gorbachev tackled the country's economic problems energetically, however, declaring that the economy had entered a "pre-crisis" stage. The leadership and the press acknowledged shortcomings in the economy with a new frankness.

Under the Twelfth Five-Year Plan, 1986-90, Restating the aims of earlier intensification efforts, the "Basic Directions for the Economic and Social Development of the USSR for 1986-1990 and for the Period to the Year 2000" declared the principal tasks of the five-year plan period to be "to enhance the pace and efficiency of economic development by accelerating scientific and technical progress, retooling and adapting production, intensively using existing production potential, and improving the managerial system and accounting mechanism, and, on this basis, to further raise the standard of living of the Soviet people."

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