Soviet Industry

On the eve of the Geneva Conference, Marshal Bulganin, in a speech to the Central Committee of the Soviet Communist Party, acknowledged the shortcomings of the Soviet industrial organization. For an appraisal of Bulganin’s far-reaching report we turn to EDWARD CRANKSHAW,the English author and historian. Mr. Crankshaw first visited Russia as a member of the British Military Mission to Moscow; he went back again in 1947 as a writer for the London Observer; and it was in the course of these tours of duty that he assembled the source material for his two readable and authoritative books, Russia and the Russians and Cracks in the Kremlin Wall.



FOR very many years one of the show places of the Soviet Union has been the huge automobile factory at Gorky named after Molotov, where the ZIM cars are made. It is one of the prides of Soviet industry and a popular symbol of Soviet power. Another is the ZIS automobile factory in Moscow, named after Stalin. In a speech to the Central Committee of the Soviet Communist Party released on the eve of the Geneva Conference, Marshal Bulganin rudely upset the complacency of the managerial staff of ZIM. He said, “What we have here is not an automobile works but a universal production works.” He said the same applied to ZIS in Moscow and to almost every other factory in the Soviet Union. He explained what he meant, and at the same time he inaugurated a revolution in Soviet industrial thinking.

He was criticizing the ZIM works because it had allowed itself to be sidetracked from its proper business of producing motorcars. Only 67 per cent of its total production came out in the form of automobiles, he said. “In addition to automobiles, this factory produces bicycles, machine tools, forging, stamping, smelting and welding equipment, small electrical installations, agricultural machines, various instruments, electrically welded piping, and much else. Each month this works produces for its own consumption tens of thousands of oilcans which could be successfully made by any workshop employing craftsmen. . . . A wide range of production impedes the organization of output, the use of flow methods of production, complicates the technological equipment of production processes, and acts as a brake on the introduction of highly productive automatic equipment. All this leads to increased production costs.”

In other words, it is very interesting to work in a great Soviet factory — as interesting as working in a small-town garage; more interesting, even, because there is so much more scope. But it is not modern industry. The qualities required are the qualifications of the super-handyman; the worker’s horizon is being constantly widened. But the result is not all that is required. At Bryansk, for example, to quote Marshal Bulganin, there is a large locomotive works, but a great deal of the floor is taken up by anything but locomotives. “In addition to producing several types of wagons, it is manufacturing steam turbines, trains for electric power stations, trolleys for conveying molten pig iron, small rolled metal items, cast iron and steel for other works, tractor and locomotive spare parts, spare parts for electric power stations, and various other items. In a word, this factory is working on the principle, as the popular saying goes, of tinker, tailor, baker, and candlestick maker.” And Marshal Bulganin had further shattering examples. He revealed in passing that it is the practice of most engineering works to manufacture-their own nuts and bolts. The average cost of these is fourteen times greater than that of the same article turned out by one of the few specialist factories, and the operation consumes just about twice as much metal — for example, “in order to produce one ton of bolts a specialized works uses 1000 kg. of metal, while a non-specialized works uses 2000 kg.”

The situation, he said, was particularly bad when it came to metal castings and forgings: instead of taking their castings and forgings from specialized shops, individual enterprises of all kinds are making their own — at treble the cost. The same applies to components of all kinds. Furthermore, each individual ministry manufactures its own machines and tools, often unskillfully, always at the expense of far more money, material, and labor than is necessary in a specialized works.

Marshal Bulganin’s report is the first statement by any Soviet minister since 1931 which attempts to tell the truth about Soviet industry. It is a mine of information and enlightenment. It acknowledges all those shortcomings of Soviet industrial organization which have been familiar to the student for decades — and steadfastly denied by the Russians. It admits that much of the finest Soviet engineering is obsolete. It compares with extreme frankness Western performance with Soviet performance, and instructs Soviet engineers and designers to jump out of their complacency and look to the West for guidance— and not only to America: Britain, Italy, Sweden, and the West German Republic are all cited as producing goods and machines superior to their Soviel counterparts.

Marshal Bulganin introduced a new slogan into Soviet industry: specialization. What he meant was rationalization. What he was saying in effect was that Soviet industry, notwithstanding its mighty achievements, had reached a crucial phase: if it was to move forward and become comparable with American industry, it must rationalize itself from top to bottom. And until it can make itself comparable with American industry, the consumer will continue to suffer.


THIS is really what Marshal Bulganin’s speech was about; and this is what the consequent upheaval in Soviet industry is about. It is the first major change of direction since the inauguration of the Five-Year Plan period in 1928. The change is from sprawling, wasteful extensive growth to the intensive development of existing resources. For nearly three decades Soviet industry has proceeded on the general assumption that it had at its command unlimited manpower and resources. It did not matter at what cost the machines were produced — in terms of manpower, money, raw materials, and human suffering — provided they were produced.

In countries liable to flooding, the construction and maintenance of dams and dikes proceeds normally in a planned, orderly, and economical way; but when the floods rise and a dike bursts, then everything is flung into the breach, regardless of cost, regardless of the dislocation of the normal national services, until the waters are held. It is like a war. And this was the mood in which Stalin tackled the forced industrialization of the Soviet Union. Starting more or less from scratch, he gave himself ten years to make the Soviet Union strong enough to withstand invasion by mechanized forces of the industrial West. Nothing else mattered. Thus the Soviet industrial revolution was started under what were effectively war conditions. Then came the real war, with the accelerated development of heavy industry east of Moscow and its destruction west of Moscow; then, in 1945, in the great reconstruction, a repetition of the early days, but on a larger scale and with the experience and techniques collected in twenty years to draw on.

In 1946 Stalin set himself another quasi-military target. He said: “We must achieve a situation whereby our industry is able to produce each year up to 50 million tons of pig iron, up to 60 million tons of steel, up to 500 million tons of coal, and up to 60 million tons of oil. Only under such conditions can we regard our country as guaranteed against all accidents. This, I think, will require at least three new Five-Year Plans, if not more.”

Everything else was to go by the board until these figures should be fulfilled — by 1960 at the earliest , thought Stalin. Until then, there was to be no question of sacrificing heavy industry and capital expansion to light industry. The Soviet people were called upon to work and suffer in silence.

Stalin in those days took little stock in the atom bomb. He also believed that long before 1960 there would be a disastrous slump in America. But the atom bomb was there; and the hydrogen bomb, its successor, has brought it home to the new rulers that their country can never be guaranteed against all accidents. Also, instead of slumping, the American economy has continued to expand at a rate beyond all possible Soviet foreseeing—and with it the economies of other Western lands. So that Stalin’s figures for 1960 now seem pathetic as an insurance against all possible contingencies.

Nevertheless, they represent a very considerable achievement, and in terms of a war economy they are more formidable than they look. Only a fraction of America’s tremendous output of primary products goes into the war machine; whereas in the Soviet Union the greater part is at once converted into the sinews of war. Also it appears that Stalin’s figures will be fulfilled. In oil they have already been surpassed. In his report to the Central Committee, Marshal Bulganin concerned himself not only with the shortcomings: he also had progress to report. He was able to announce the fulfillment of the current Five-Year Plan for industry (but not for agriculture) in May of this year, eight months ahead of schedule. He invoked Stalin’s 1946 figures. Thanks to the swift development of rich new oil fields, oil production has this year reached 70 million tons. Pig iron stands at 33 million tons, steel at 45 million tons, coal at 390 million tons.

The increases have been spectacular. It is probable, though not certain, that Stalin’s goal will be achieved before 1960. But the rate of increase is already dwindling. The most easily worked coal and ore is being exhausted, and development here will be slower; the manpower problem is already acute and will grow still worse when the annual intake begins to fall in year or two because of the decline in the birth rate during the war years. The Russians find themselves in a spiral, familiar enough in the West, which works on the principle that the higher the national product the more men must be taken away from primary production and put into factories and public services to exploit those products. The Soviet transport system, for example, if it is to be made adequate to cope with the increased level of production, will make tremendous demands on manpower and material. Again, as the national product increases, the same volume of increase each year must express itself in a dwindling percentage increase.

Finally, the conditions under which Stalin carried out the exploitation of his country’s wealth were inimical to the development of a balanced relationship between skilled and unskilled labor. The demand for unskilled labor in its crudest and cheapest form, as expressed most absolutely in the forced labor system, militated against the growth of that huge body of skilled artisans and technicians now required to make the best use of existing resources.

It is clear that, to achieve the figures cited by Marshal Bulganin, the ramshackle Soviet industrial economy cannot go on in the present haphazard manner. It is clear also that it is in no position to provide the Soviet people with the consumer goods they must have if they are to be turned into a modern society. Here, I think, is the crux. Beyond reaffirming the Party line on continued priority for heavy industry at the cost of consumer goods, Marshal Bulganin had little to say about the consumer. But the consumer must have been very much in his mind.

One of the first acts of the Malenkov government after Stalin’s death was to declare that heavy industry was in such good shape that thenceforth the government proposed to concentrate on the needs of the consumer and on raising the standard of living. New factories were to be built for light industry; existing factories devoted to heavy industry were to divert a proportion of their resources and floor space to turning out consumer goods (this expedient was partly responsible for the chaos in factories like the ZIM factory); the disproportion between the output of capital and consumer goods was to be corrected. This disproportion was very marked. In 1940, Malenkov said, the ratio of heavy industry to light industry was 60:40; in 1953, the year of Stalin’s death, it was 70:30. This disproportion can be put in another, more dramatic way: at the end of the first post-war Plan, in 1950, it was claimed that industrial output as a whole had increased over 1940 by 73 per cent, but the increase in light industry had only been 17 per cent. The disproportion was all the more striking in that heavy industry largely exceeded its target — by 48 per cent — while light industry fell below its target — by 23 per cent. The Plan had thus been distorted in the process of execution to increase the burden on the unfortunate consumer.

In the second post-war five-year period, begun while Stalin was still alive, the first serious attempt since 1938 was made to satisfy consumer needs. On paper it looked more impressive than in fact it was. Heavy industry was scheduled for an 80 per cent increase, consumer goods for a 65 per cent increase. But in contemplating those figures it is necessary to bear in mind that the 65 per cent increase for consumer goods referred to a 65 per cent increase on an intolerably low figure, and that the consumer goods turned out in this period, from 1950 to 1955, were virtually the first available to the Soviet people since 1941. Malenkov pledged himself to increase this figure; and according to Marshal Bulganin the 1950 level will be surpassed this year by 72 per cent instead of 65 per cent. On the other hand, the reaffirmed emphasis on priority for heavy industry has brought about the raising of its target from 80 per cent to 84 per cent. So the consumer has gained very little from Stalin’s death.

It is imperative that he should gain more, and the Soviet leaders know it. It is impossible to turn Russian peasants and unskilled laborers into sober, alert, and responsible members of a modern society, fit to cope with the skills, the tempo, the obligations of that society, without raising their standard of living correspondingly. There is a stage in every industrial revolution in which production is best and most economically served by housing the workers in slums, compelling them to long hours, and treating them as mindless “hands.” The industrial revolution of the Soviet Union is now passing out of this stage. After Stalin’s death the new leaders showed their awareness of this, and started to take immediate action — only to find that the industrial machine as it existed was incapable of swift adaptation to the production of consumer goods without total dislocation. They called a halt and thought again.

While Khrushchev on the agricultural front launched his stupendous effort to increase food production to feed the towns more adequately without increasing the rural labor force, Bulganin (who before he became a statesman was one of the most able industrialists in the Soviet Union) was evidently sitting down with his advisers to diagnose the basic ills of Soviet industry. His report to the Central Committee said, in effect, that until the whole industrial machine could be reorganized and streamlined, until more advanced technicians could be got into it and the most gifted organizers given their heads, there could not be the overall increase in production necessary to raise the standard of living of the Soviet Union.

What he did not say was that until this standard is in fact radically raised the Soviet Union, for all the high peaks of its achievement, will remain a backward country. The Soviet industrial revolution has turned Russia into a first-class power. The question is whether it can be continued so as to transform her into the sort of prosperous modern society which alone can sustain great power.