Economy
Industry
War Communism 1918-21
Led to plummet in industrial production, with 1921 output only 1/5 of 1913 output
- caused by disorganization
instability + upheaval caused by civil war (disruptions in supply chains etc)
industrial workforce declined from 3 million to 1.2 million 1917-22
NEP 1921-28
Industrial production output increased (by factor of 5 1921 to 1928) due to adoption of
more capitalist leaning policies during the NEP period AND the relative stability after the
end of the civil war
Although economy did improve under NEP, this is mainly because it was in a terrible
state in the aftermath of the civil war; the economic growth in the period was relatively
quite limited
- GDP per capita in 1928 same as 1913
- By 1928 the economy had stopped growing
First three ‘Five year plans’ 1928-40
Resulted in huge industrial output increase + huge advances in electrification
- Coal + oil production increased by factor of 3 1928-40
- Iron + steel production increased by factor of 4 1928-40
- Electric power increased by factor of 10 1928-40
Big increase in mechanized transport + large expansion of transport networks
- 700 lorries 1928 to 136,000 lorries 1940
- 2000 tractors 1928 to 66,000 tractors 1940
Impressive projects testament to huge gains in heavy industry
, - Dnieper dam built 1932 (world’s largest hydroelectric dam (60 metres high and
800 metres across)
- 141 mile ‘White sea’ canal built connecting white sea to Baltic Sea + used for
transport of ppl + goods
- First line of Moscow Metro (huge + magnificent underground station which made
the capital significantly more interconnected) opened 1935
Huge output from factories
- Chelyabinsk: major tractor producing centre (1940, 100,000 tractors produced)
- Stalingrad centre of heavy industry (by 1939, its tractor works was producing half
of tractors in USSR)
More detailed plan for each industry + region during second + third five year plans
(targets, costs, labour, prices etc all planned) overproduction + underproduction
continued but not on same scale
Huge inefficiency (overproduction + underproduction AND poor quality) resulting from
- lack of detailed planning and coordination of both resources and workforce (officials
and managers largely left to achieve targets)
- unachievably high targets set (created strong competition for the limited resources
available + forced firms to order more than was necessary to ensure they had a
sufficient supply)
- Problem exacerbated by
Poor transportation system (inability to transport resources across country)
Great purges 1936-38 (deprived economy of valuable, capable administrators
and leaders which could organise economy)
Stalin’s response (ordered those that complained or criticised to be executed
and imprisoned, eg in Shakhty trial which led to five managers and technical
staff administering coal mine executed + rest imprisoned) which led to figures
being forged + worsening chaos of economy
Fourth + Fifth ‘Five year plans’ 1945-53
Soviet industry quickly rebuilt beyond pre-war levels despite suffering huge destruction
(70% of industrial production capability lost by end of WW2 + 28 million ppl killed)
- 88% of investment went into heavy industry + armaments production
- Resulted in coal, oil and steel production doubling 1945 to 1950, + by 1950, coal, oil
+ steel output had exceeded 1940 levels
- Success is testified by fact that economy became fastest growing in world
, Khrushchev 1953 – 64
- Significant gains in light industry
Synthetic fibre production increased by factor of 2.5
Overall increase in consumer production of 60%
Production of modern equipment increased (eg fertiliser production increased by
19 million tonnes / yr across period)
- Economy growing as a whole
Annual growth rate 7% during 1950s (compared to 3% for US)
- Improvements in transport
Important for logistical side of economy (moving machinery, resources etc)
o diesel trains added to Russian railways + some railway lines electrified
o New rail lines opened into virgin lands to transport crops/supplies
- Slow down in economy’s growth rate
1950-58, economy grew at average of 7% per year (US only 3%)
1958-64, growth slowed to 5%
Reasons for poor performance
Long term problems (K refused to implement fundamental reform)
o Command economy (not designed to produce consumer goods or
improve efficiency (intensive rather than extensive growth))
Very difficult to centrally manage production of complex goods
such as cars, lamps and watches with crude target system based
on quantity rather than quality, eg when consumer industries such
as furniture factories set targets for value of goods, they produced
small number of expensive goods which no one could afford
Improving efficiency (eg of mines + factories) relies on detailed
information about particular factories + also ability to adapt to
unique needs, neither of which central command structure could
satisfy
o Military spending
USSR committed to high levels of military spending, limiting funds
available for industrial development
Although cut military spending from 12% to 9% between 1955 and
1958, series of cold war crises (including Berlin Crisis (Ultimatum
Industry
War Communism 1918-21
Led to plummet in industrial production, with 1921 output only 1/5 of 1913 output
- caused by disorganization
instability + upheaval caused by civil war (disruptions in supply chains etc)
industrial workforce declined from 3 million to 1.2 million 1917-22
NEP 1921-28
Industrial production output increased (by factor of 5 1921 to 1928) due to adoption of
more capitalist leaning policies during the NEP period AND the relative stability after the
end of the civil war
Although economy did improve under NEP, this is mainly because it was in a terrible
state in the aftermath of the civil war; the economic growth in the period was relatively
quite limited
- GDP per capita in 1928 same as 1913
- By 1928 the economy had stopped growing
First three ‘Five year plans’ 1928-40
Resulted in huge industrial output increase + huge advances in electrification
- Coal + oil production increased by factor of 3 1928-40
- Iron + steel production increased by factor of 4 1928-40
- Electric power increased by factor of 10 1928-40
Big increase in mechanized transport + large expansion of transport networks
- 700 lorries 1928 to 136,000 lorries 1940
- 2000 tractors 1928 to 66,000 tractors 1940
Impressive projects testament to huge gains in heavy industry
, - Dnieper dam built 1932 (world’s largest hydroelectric dam (60 metres high and
800 metres across)
- 141 mile ‘White sea’ canal built connecting white sea to Baltic Sea + used for
transport of ppl + goods
- First line of Moscow Metro (huge + magnificent underground station which made
the capital significantly more interconnected) opened 1935
Huge output from factories
- Chelyabinsk: major tractor producing centre (1940, 100,000 tractors produced)
- Stalingrad centre of heavy industry (by 1939, its tractor works was producing half
of tractors in USSR)
More detailed plan for each industry + region during second + third five year plans
(targets, costs, labour, prices etc all planned) overproduction + underproduction
continued but not on same scale
Huge inefficiency (overproduction + underproduction AND poor quality) resulting from
- lack of detailed planning and coordination of both resources and workforce (officials
and managers largely left to achieve targets)
- unachievably high targets set (created strong competition for the limited resources
available + forced firms to order more than was necessary to ensure they had a
sufficient supply)
- Problem exacerbated by
Poor transportation system (inability to transport resources across country)
Great purges 1936-38 (deprived economy of valuable, capable administrators
and leaders which could organise economy)
Stalin’s response (ordered those that complained or criticised to be executed
and imprisoned, eg in Shakhty trial which led to five managers and technical
staff administering coal mine executed + rest imprisoned) which led to figures
being forged + worsening chaos of economy
Fourth + Fifth ‘Five year plans’ 1945-53
Soviet industry quickly rebuilt beyond pre-war levels despite suffering huge destruction
(70% of industrial production capability lost by end of WW2 + 28 million ppl killed)
- 88% of investment went into heavy industry + armaments production
- Resulted in coal, oil and steel production doubling 1945 to 1950, + by 1950, coal, oil
+ steel output had exceeded 1940 levels
- Success is testified by fact that economy became fastest growing in world
, Khrushchev 1953 – 64
- Significant gains in light industry
Synthetic fibre production increased by factor of 2.5
Overall increase in consumer production of 60%
Production of modern equipment increased (eg fertiliser production increased by
19 million tonnes / yr across period)
- Economy growing as a whole
Annual growth rate 7% during 1950s (compared to 3% for US)
- Improvements in transport
Important for logistical side of economy (moving machinery, resources etc)
o diesel trains added to Russian railways + some railway lines electrified
o New rail lines opened into virgin lands to transport crops/supplies
- Slow down in economy’s growth rate
1950-58, economy grew at average of 7% per year (US only 3%)
1958-64, growth slowed to 5%
Reasons for poor performance
Long term problems (K refused to implement fundamental reform)
o Command economy (not designed to produce consumer goods or
improve efficiency (intensive rather than extensive growth))
Very difficult to centrally manage production of complex goods
such as cars, lamps and watches with crude target system based
on quantity rather than quality, eg when consumer industries such
as furniture factories set targets for value of goods, they produced
small number of expensive goods which no one could afford
Improving efficiency (eg of mines + factories) relies on detailed
information about particular factories + also ability to adapt to
unique needs, neither of which central command structure could
satisfy
o Military spending
USSR committed to high levels of military spending, limiting funds
available for industrial development
Although cut military spending from 12% to 9% between 1955 and
1958, series of cold war crises (including Berlin Crisis (Ultimatum
