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10th Five-Year Plan - 1976-1980

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.

In the tenth five-year period (1976 - 1980), the largest workshops in the country were put into operation: cold rolling of carbon sheets, an oxygen-converter shop with continuous casting machine, pellet production facilities, as well as facilities for the production of ferroalloys, iron ore, pipes, hardware, etc. Ust-Ilimskaya HPP and Kama Automobile Plant were commissioned. Accordingly, the length of the main oil and gas pipelines has increased by another 15 thousand and 30 thousand km. In August 1977, the Soviet atomic icebreaker "Arktika" reached the North Pole for the first time in the history of navigation.

However, the crisis phenomena of the Soviet economy were clear: physical deterioration and obsolescence of equipment; investing money, mainly, in the construction of new enterprises, and not in modernization, which led to a large proportion of manual and low-skilled labor; significant growth in military spending (high-tech industries worked for military orders, the share of military spending in the gross national product was about 23%, which led to large disparities); and significant growth of the shadow economy.

At the turn of the 1970s-1980s. a new stage of the scientific and technological revolution has begun in the world. The level of development of the country began to be determined by the use of microelectronic technology. According to this indicator, the USSR lagged behind the industrialized countries for decades. The lag in laser, fiber-optic and other advanced technologies was growing. The reason was not the absence of fundamental and applied developments, but the inability and disinterest of the administrative command system to introduce them into production. 6-8 years passed from the development of a prototype to its mass production. By the early 1980s. crisis phenomena were clearly manifested in the economy of the USSR.

Serious imbalances characterized the economy, however, and the Soviet Union lagged behind most Western industrialized nations in the production of consumer goods and services. A stated goal of Soviet policy had always been to raise the material living standards of the people. Considerable progress had been made; according to Western estimates (less flattering than Soviet), from 1950 and 1980 real per capita consumption increased 300 percent. The country's leaders had devoted the bulk of the available resources to heavy industry, however, particularly to "production of the means of production." Levels of consumption remained below those of major capitalist countries and most of the socialist countries of Eastern Europe. By the late 1970s, policy makers had recognized the need to improve productivity by emphasizing quality factors, efficiency, and advanced technology and tapping "hidden production reserves" in the economy.

At the turn of the 1970s-1980s. a new stage of the scientific and technological revolution has begun in the world. The level of development of the country began to be determined by the use of microelectronic technology. According to this indicator, the USSR lagged behind the industrialized countries for decades. The lag in laser, fiber-optic and other advanced technologies was growing. The reason was not the absence of fundamental and applied developments, but the inability and disinterest of the administrative command system to introduce them into production. 6-8 years passed from the development of a prototype to its mass production. By the early 1980s. crisis phenomena were clearly manifested in the economy of the USSR.

Brezhnev had criticized the planning mechanism for years. At the November 1978 plenum of the Central Committee, he revealed that the Politburo had approved a decision "recently" that extended the powers of Gosplan, increased its coordinating role, and enjoined it to focus its attention more on long-term planning. He also revealed that the Council of Ministers had been charged with preparing recommendations for "perfecting the entire economic mechanism."

On 28 July 1979 it was revealed that the Politburo had adopted a resolution "on further perfection of the economic mechanism and tasks of party and state organs". Izvestiya published a lengthy summary of a separate Central Committee and Council of Ministers' resolution"On Improving Planning and Strengthening the Impact of the Economic Mechanism on Raising the Effectiveness of Production and the Quality of Work." This document apparently represented the fruit of the Council of Ministers' effort, aided by Gosplan, to reform itself. Still further changes were promised by the 28 July 1979 announcement, which stated: "It is planned to work out proposals for the further improvement of the organizational structure of administration, having foreseen in them measures for overcoming departmental diffusion, perfecting branch and territorial administration and organizational forms for implementing target programs and also proposals for raising the role of Soviets of People's Deputies."

The Chairman of the USSR Council of Ministers, Aleksey Kosygin, published a wide-ranging, future-oriented article on economic plans and priorities in the July 1979 issue of Planned Economy, the journal of the State Planning Committee (Gosplan). The article's appearance coincided with what appeared to be a highpoint in the campaign, prodded along by President Brezhnev, to institute changes in economic planning and management. Kosygin's article was in a sense a personal statement, as it defended certain positions long advocated by him (e.g., on energy policy), ignored other positions that are developed in the 29 July joint Central Committee-Council of Ministers resolution "On Improving Planning ..." (e.g., the need for "program-centered planning), and paid only minimum obeisance to the Brezhnev cult.

Politically, the article represented a defense of the existing system of plan elaboration by Gosplan, co-ordination through the Presidium of the Council of Ministers and Central Committee apparatus, and implementation of plan targets by vertically structured branch ministries. Economically, the article emphasized technological innovation as the strategic key to economic growth. The thrust of these measures was clearly toward greater centralization, an enhancement of directive elements in economic administration (particularly with respect to the binding character of five-year plan targets), and cautious experimentation with a range of mutually contradictory "success indicators."