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8th Five-Year Plan - 1966-1970

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.

The economist most widely identified in the West with “reforms” was Ye.G.Liberman, who was neither mathematically oriented nor radical in his approach. Liberman was a moderate whose relatively modest proposals were reflected to some extent in the reforms that had been carried out since 1965. At the time, more thinkers supported Liberman's proposals for modest reform, evidently because they thought they would be politically acceptable to the regime and would not arouse strong vocal opposition among orthodox economists. It seems, however, that the real intellectual setting for the reform was provided by the modern economists of major stature, such as Nemchinov, Novozhilov, and Kantorovich, for whom Liberman served as acceptable spokesman.

In September 1965, Kosygin announced a comprehensive planning reform that implemented some of the ideas of the Kharkov economist Yevsey Liberman. Under Khrushchev, more emphasis had been given to the consumer sector, including housing. But changes were instituted too precipitously, too unilaterally, and too "free" for the Party-liners, Khrushchev was ousted in 1964, and the economy settled back into its past mode of operation, i.e., the emphasis centered on quantity rather than quality, extensive growth rather than intensive growth.

There was a brief flurry of activity with the Liberman proposals to make profitability, i.e., the rate of profits (determined as the ratio of profits earned to the sum of working and basic capital, and definitely not profits in the western sense), the principle measure of economic performance. The ideas of Soviet economist Y.G. Liberman’s were published in an article on the role of profit earning capacity and profits in general in the Soviet economy in Pravda, September 9, 1964. The Liberman reforms were strictly a numerical quantitative measure of the rate of profits. It was the amount of profits divided by basic and working capital. That is all it was; it was not real reform. It was strictly a statistical measure. Khrushchev had tried to solve all economic problems through organizational changes, but what was needed was to deal with substantive matters.

In connection with the genesis of the 1965 economic reform proposals, Soviet planners became convinced that the key to improved economic performance lay in developing much more "scientific" bases and methodologies for centralized planning. The call for more "scientifically-based" plans involved two major ideas. First. long-term forecasts of scientific and technological developments should be made in some detail, and second, all parts of the plan should be based on projections (forecasts) of economic and social variables made with the use of modern mathematical and economic models. The planners perceived that the Soviet economy was not participating in the ongoing, world technological revolution and evidently believed that if accurate forecasts of technology were made, the plans could take them into account, and the USSR's track record in this area would be improved.

The forecasting craze that resulted apparently had its genesis in a speech that Premier Kosygin made to Gosplan officials in 1965. Stressing the importance of scientific and technical progress, he said, "Can we, in projections of the national economy, ignore substantiated forecasts relating to the future? No, we cannot." Forecasting was institutionalized by providing as part of the Eighth Five-Year Plan a "State Plan for Highly Important Scientific Research" that included a comprehensive plan for working out socioeconomic forecasts and forecasts of technological developments for 1971-75 and beyond.15 Dozens of institutes launched forecasting programs, the effort being greatly facilitated by the increasing availability of more and better computers.

In December 1966, the first Scientific Conference on Economic Forecasting was held under the auspices of Gosplan and the Academy of Sciences. The high-level, active support for forecasting also touched off a lively, theoretical debate over the role of such forecasts in Socialist planning; this subject was sensitive, since it revived methodological-ideological issues in planning that had lain dormant since the 1920's.' 7 The pragmatists have overcome the ideological scruples with the dictum "A plan without a forecast is just as impossible under Socialism as a forecast without a plan."

The eighth five-year plan (1966-70) was developed on the basis of the Directives of the 23rd Congress of the CPSU (1966), as well as the decisions of the October (1964), March and September (1965) plenums of the Central Committee of the CPSU, at which a long-term program for the further development of the country's economy was developed. The most important link in this program is the transition to the sectoral principle of managing the national economy, broad economic stimulation of the growth and improvement of production. The main economic task of the five-year plan was to ensure a significant growth in industry, high sustainable rates of development of agriculture and a significant rise in the standard of living of the people through the use of the achievements of science and technology, the industrial development of all social production, and an increase in its efficiency. The most important feature of this plan is the simultaneous acceleration of the rate of economic development of the country and an increase in the living standards of the people.

The plan was developed and implemented in the context of the deployment of the economic reform, which is a set of measures to improve planning, management and management, which favorably affected its implementation. For the first time, the formulated task of ensuring the industrial development of the entire social production provided for its optimal concentration and economically feasible specialization, the introduction of high-performance machines and progressive technology, the scientific organization of production and labor in all sectors of the national economy. The task was set - to carry out basically the transition to universal secondary education.

Comparison with previous plans was made more difficult by the fact that the Eighth Five-Year Plan was published only in the form of Directives. However, main directions of technical progress envisioned in the Plan resemble those followed in previous plans. such as emphasis on electrification, mechanization and automation, and on enlarging production units.

The main tasks of the five-year plan were fulfilled, and in a number of important indicators they were exceeded: the national income grew by 41.5% instead of 38-41% according to the plan, real per capita income - by 33% versus 30%, industrial production - by 50.5 % instead of 47-50%, etc. The growth rates of agricultural production accelerated. The average annual production of this sector has increased by 21% against 12% in the previous five-year period. During the years of the 8th five-year plan, the country's economic potential has grown significantly. The production fixed assets in the national economy increased by 48%. The coefficient of renewal of these funds was 44, and in agriculture - 54%. Compared with 1961-65, the volume of funds allocated for capital construction has increased by 43%, the growth rate of social labor productivity has accelerated by 37% against 29% in the previous five-year period.

Over 1900 large industrial enterprises and facilities were built. Among them - Pridneprovskaya SDPP, Volzhsky pipe plant, blast furnaces with a volume of 2700-3000 m 2, Donetsk worsted-spinning mill, knitwear factories in Volgograd, Shakhtyorsk and Leninogorsk, shoe factories in Volgograd and Cherepovets, etc. The formation of a unified energy system of the European part of the USSR has been completed. The united energy system of Central Siberia was created. The role of intensive factors in the growth of national income has increased, which is reflected in the acceleration of the growth rate of labor productivity, a decrease in the material consumption of products, and an improvement in the use of fixed assets in many sectors. This made it possible to carry out various measures to improve the living standards of the people. Further improvement of territorial proportions contributed to the development of the economy of the Union republics and the economic regions of the country, accelerating the growth rates of industry in the eastern and northern regions. Along with the acceleration of the economic development rates, the main economic indicators and proportions have improved. The most important direction of these changes is an increase in the share of resources for consumer consumption.

The Politburo laid down the guidelines of the annual and five-year plans which were then drafted by the government planning organization. The Politburo reviewed these drafts and recommended their acceptance by the Party's Central Committee, which, in turn, approves them. They were then formally ratified by the U.S.S.R. Supreme Soviet or government legislative arm, thereby giving them force of law for every form of Soviet activity. The only recent exception to this practice occurred when the U.S.S.R. Supreme Soviet failed to ratify the draft directives of the 8th Five-Year Plan (1956-70) issued by the 23rd CPSU Congress - perhaps because of embarrassment for they were issued almost two years after the plan allegedly had gone into effect.

The Eighth Five Year Plan (1966-1970) called for 52 million sq. m. of housing to be built by Coops. Instead, only 33.5 million sq. m. were built-less than two-thirds of the amount expected. According to the Eighth Five-Year Plan, the number of all skilled wageworkers in the machine-building industry was to increase during the years 1966-70 by 35.1 percent, in the chemical- industry by 68.0 percent, in ferrous metallurgy by 9.2 percent, in construction materials by 30.9 percent, in railroad transport by 14.5 percent, and in construction by 12.0 percent. In the coal industry the number was to decrease by 11.6 percent. Despite the expansion of the vocational-technical school system during the 1960's, however, the supply of. newly trained workers apparently still fell far short of demand in various branches of industry. Thus, in 1970 none of these branches could expect to be able to fill more than one-third of its vacant skilled worker positions with qualified graduates from vocational-technical schools.