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Ygael Gluckstein

Stalin’s Satellites in Europe

Part One
The economy of the Russian satellites

Chapter V
The economic plans of the satellites

ALL THE satellite countries have introduced economic Plans. These plans are of two kinds: the short-term plans, which ran from 1947 to 1948-9, whose aim was recovery, and the long- term plans, which began in 1949 or 1950, whose aim is to raise production considerably above the pre-war level. Yugoslavia alone did not undertake the two kinds of plans but started with a Five Year Plan (1947-51), while Rumania has not yet gone beyond the scope of one-year plans (she intends to introduce a Five Year Plan in 1951). Let us examine the main features of the plans.

The long-term plans have very ambitious targets of output. They fix an annual increase in the gross national product of 8 per cent in Czechoslovakia, 10 per cent in Hungary and Poland, 12 per cent in Bulgaria and 14 per cent in Yugoslavia. As regards the annual increase in manufactured products, it is 9 per cent in Czechoslovakia, 11 per cent in Poland, 13 per cent in Hungary, 17 per cent in Bulgaria and 37 per cent in Yugoslavia.

To arrive at a correct conception of what these percentages mean, it is necessary to know on what basis these percentual calculations have been made. For instance, the industrial production in the US and British Zones of Germany rose between December 1946 and December 1948 by 137 per cent, or on a yearly average by 68.5 per cent, but this in itself does not signify any really spectacular achievement for Germany, since in December 1946 the level of production was exceptionally low, and even after the increase of 137 per cent, it did not reach the pre-war level. It is difficult to discover what is the exact starting point from which the plans of the Eastern European countries set out, as there is very little information available on the subject. It is known that the agricultural output in the basic year was, in percentage of pre-war output, in Bulgaria, 70 per cent; in Czechoslovakia, 80 per cent; in Hungary, 85 per cent; in Poland, 70 per cent; in Yugoslavia, 69 per cent. As regards the industrial output in the basic year, it was, in comparison with the pre-war level, in Czechoslovakia, 102 per cent; in Poland, 133 per cent; in Bulgaria, 170 per cent. As far as Poland is concerned, it must be borne in mind that the addition of the “Regained Territories” doubles her industrial capacity. It is not known how much weight is given in the plans to industrial as compared with agricultural output in the total national output. The rise of the total national production would have been considerably less proportionately if any year before and not after the war had been chosen as the basic year, since agricultural output in the “basic year” was in each country below the pre-war level of output and industrial output was above while only a small minority of the population was engaged in industry.

In addition, it is obvious that in general any calculation in percentages of the rise of output that does not take into consideration the absolute magnitude of the basis will paint a rosier picture the more backward the country is. Thus if Yugoslavia’s Five Year Plan envisages an increase in the output of crude steel of 223 per cent in 1951 above the level of 1939, it might leave the impression that the achievements of Yugoslavia’s steel industry will be four times greater than that of the United States between 1937 and 1948, when she increased her output by 56 per cent. But if the achievement of the industries of the two countries is described in absolute magnitudes, a totally different impression is given. The production of Yugoslavia’s steel industry will rise, if the Plan is fulfilled, from 240 thousand tons to 760 thousand tons, i.e., by a little more than half a million tons; while that of the U.S.A. rose from 51.4 million tons to 80.3 million, i.e., by 28.9 million tons. André Philip, French delegate to the Economic Commission for Europe, illustrated this point by saying that his grandson had recently cut a second tooth, thus increasing his dental production by 100 per cent – but he still had less teeth than most people.

There is another aspect to the question. Figures of the rise in output, when the amount of investment or disinvestment is not taken into account, can be misleading. If the owner of a factory does not renew its machinery, buildings, and so forth, but instead builds a new factory which is equal in value to the depreciation of the old, then the immediate result is that two factories are producing instead of one, and the output rises, although the amount of his capital remains unchanged, and after the total depreciation of his old factory, output will decline to the level of only one factory. The same principle holds good for the countries of Eastern Europe, where the rise in output over the past few years has not been accompanied by a parallel increase in the investment of capital. In some cases, it has even been accompanied by disinvestment, as the following table, dealing with agriculture, shows:

(In order not to get a false picture one should bear in mind that the negative balance of investments in agriculture in fixed capital may have been offset by an increase in livestock, which is not included in the figures).

Another example of the same phenomenon is the textile and clothing industry of Poland. This showed a big rise in output in [947, and at the same time a net disinvestment of 10 million dollars in 1938 prices (Ibid., p. 53).

Another factor must be taken into account. In the backward conditions of Eastern Europe, even a small addition to the net investment may bring about a disproportionately large addition to the output, the more so – in the short run – if certain whole new industries are built while other plants or branches of industry are starved of capital.

Even with these reservations, the investment plans of the countries of Eastern Europe should not be underestimated, though the statistics are really related to gross new investments (without depreciation being taken into account). In absolute figures the targets were:

Thus every year a gross investment is planned of about 4 thousand million dollars in 1948 prices. This is a tremendous figure, making up about 20-2 5 per cent of the national incomes of these countries. Such a large investment, of course, places a heavy burden on the shoulders of the population.

How do these investment targets compare with actual investments in other countries? The gross annual investment, according to the Plans, will be about 45 dollars (at 1948 prices) per head of population. As against this in 1948 the net investment at 1938 prices (which are about half of 1948 prices) in the countries of Western Europe was: Norway 55 dollars, Sweden 42, United Kingdom 36, Denmark 32, Netherlands 27, France 16, Belgium (1947) 16, Italy 10. (Ibid., p.48). Thus compared with investments in Western Europe the investments planned in Eastern Europe are not very spectacular. [1] To realise them will require great sacrifices on the part of the populations and yet are far too small to help, in the foreseeable future, to bridge the gap between the levels of development of Western and Eastern Europe.

The magnitude of the investments planned fall short of these countries’ needs of rapid industrialisation. This is clearly revealed by considering the question of how many people will be absorbed in industry in proportion with the agricultural overpopulation and the natural increase of population. The Polish Plan fixes a total increase of 300,000 in the number of people in manufacturing industry, the Czechoslovak Plan an increase of 250,000, the Bulgarian Plan an increase of 90,000 and the Hungarian Plan an increase of 300,000 (including industries other than manufacturing). The UN Survey that gives these facts, remarks: “These figures, if related to present employment in manufacturing, indicate a substantial increase. If, however, the figures are related to the total populations of the countries, they are less striking. In the four countries mentioned, additional employment in industry over the plan period accounts for only to 2 per cent of the total population, which in itself is expected to rise by some 5 per cent in the same period” (p.206).

On many points the plans are silent. Unlike Russia’s first Five Year Plan or the plans of the Organisation for European Economic Co-operation for Western Europe, the Plans of the “People’s Democracies” contain no information about foreign trade either among themselves or between each of them and Russia, or the West. They also blur over the question of how the total national income will be divided between consumption and accumulation (investment), but contain only some scattered information about the planned consumption of some particular goods. This silence speaks volumes. The non-publication of information about foreign trade is intended to cover up the exploitation of these countries by Russia; the non-publication of information about the division of the national income between consumption and accumulation is intended to cover up the exploitation of the masses under the banner of industrialisation.

This last point about the division of the national income between consumption and accumulation is of vital importance when we attempt to discover the factors determining the living conditions of the masses. Burdened with a terrible backwardness, an autocratic bureaucracy and the yoke of Russian imperialism, industrialisation will inevitably be carried out in such a way that compulsory savings will far surpass what the people themselves would be ready to save of their own free will. In such circumstances, consumption must be subordinated to accumu1ation, as the experience of Eastern Europe over the past few years (and of twenty years’ planning in Russia) has clearly shown. The following table illustrates the “capital starvation” of the industries producing consumption goods, while the new capital investment is directed into the capital goods industries:

This is a foretaste of the future. [2]

As regards agriculture the Plans for all the countries, except Poland, provide that the output shall exceed the pre-war level, by about a sixth in Czechoslovakia and Hungary, and a third to a half in Yugoslavia and Bulgaria. In Poland it may not exceed its pre-war level in present territory. (Ibid., p.206).

A technical revolution in agriculture is also planned for the coming few years (except in Yugoslavia). This is shown by the tremendous rise in the number of tractors:

Agriculture will be reorganised on the new technical basis, state and co-operative farms replacing the small peasant farms.

Next Chapter
The socio-economic relations in the satellites

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Footnotes

1. This was reflected most clearly in a comparison of the actual net investments in fixed capital per head of population in 1949 (dollars in 1938 prices): Norway 59, UK 41, Sweden 36, Denmark 32, Netherlands 31, France 24; the corresponding figures for the countries of Eastern Europe were: Yugoslavia 12, Hungary 12, Poland 9, Czechoslovakia 8. (United Nations, Economic Survey of Europe in 1949, Geneva 1950, p.39).

2. In USSR the relatively great lag in industries producing means of consumption behind those producing means of production is shown by the following official data of the division of the gross output of industry:

It is very difficult to check the absolute change in the production of different means of consumption. In Russian statistics a number of simple tricks are used to describe the situation in more glowing terms than is true. The output of a number of consumption industries is given only in monetary terms; the production of the small factories which, till 1928, made an important contribution to the production of means of consumption, is not included.

Official statistics can therefore show a tremendous rise in the output of shoes, which, however, cannot be squared with the facts. The number of animals slaughtered annually after the big “collectivisation” drive never reached the number slaughtered previously, as it was not until 1938 that the total number of livestock reached the 1929 figure (in 1929 cattle numbered 68.1 million, in 1938 63.2; sheep and goats numbered 147.2 and 102.1 million respectively). At the same time the surplus of imported hides, skins and leather over exported was 54.3 thousand tons in 1928 as against only 15.6 thousand tons in 1938. Only Stalinist statisticians can produce the “miracle” of tripling the number of leather shoes out of a decreasing quantity of leather. The Russian government, relying on the “short memory” of the people, or more correctly on the oppressive machinery which ensures that past memories remain unuttered, adds insult to injury. While promising a tremendous rise in the production of means of consumption with every Five-Year Plan, it fixes the actual target of the Plan at a volume of production which does not exceed the target of former Plans. This is shown clearly by the following table.

(Actually in the territory of the USSR in 1913, 2,854 million metres of cotton goods and 95-110 million metres of woollen goods were produced; in 1937 the corresponding figures were 3,181 and 98).

Therefore, when the Russian government boasts that “in 1950 we will reach the level of 4.7 thousand milliard metres of cotton goods” it does not prevent them from having made the same promise twenty years ago, when the population of USSR was about fifty millions less than now.

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Last updated on 16.6.2004