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Soviet Union

Tools of Control

By the 1980s, the planning system had become extremely complex. Maintaining control over plan implementation was a difficult task. The same administrative structure undertook both the planning itself and the oversight of plan fulfillment. The banking system, party units within lower-level organizations and enterprises, and any workers willing to take responsibility for bringing to light failings within their organizations provided assistance. Labor union activists also helped supervise performance at the enterprise level and solicited support for plan fulfillment.

In addition to exercising this direct control, planners and policy makers used the budget to influence the economy. The bulk of the revenues for the budget came from levies on the profits of enterprises and from an indirect tax on consumer goods. These tax levies could be readily altered to support changing plan priorities, particularly because the government produced no longterm budgets, only yearly ones. The regime distributed budget funds according to priorities that reflected the goals of the economic plans. Unlike state budgets in the West, the Soviet budget had a consolidated format for all levels of the government. Traditionally, the budget also had included most of the investment activity carried on within the economy. Reforms of the 1980s promised to alter the situation somewhat, however; the Law on State Enterprises (Associations) called upon enterprises to use their own profits as major sources of investment (see Reforming the Planning System , this ch.).

According to official Soviet sources, primary expenditures in the 1985 budget were grants for economic purposes (56 percent of the budget); funds for social and cultural services (32.5 percent); defense spending (4.9 percent); and administrative costs (0.8 percent). A small surplus remained (typical of Soviet budgets, according to published data). Western analysts considered these statistics unreliable; most Western observers believed the defense budget's share was far greater than official figures suggested. Furthermore, Soviet definitions of various economic measurements differed markedly from Western concepts (for example, the use of net material product to measure output).

The government's pricing policy acted as another control mechanism. These prices provided a basis for calculating expenses and receipts, making possible assessment of outputs. The regime also used manipulation of prices to achieve certain social goals, such as encouragement of public transportation or dissemination of cultural values through low-priced books, journals, and recreational and cultural events.

Over the years, this centralized system had produced prices with little relationship either to the real costs of the products or to their price on the world market. For several decades, the government kept the price of basic goods, such as essential foods, housing, and transportation, artificially low, regardless of actual production costs. As agricultural costs had increased, for example, subsidies to the agricultural sector had grown, but retail prices remained stable. Only prices for luxury goods had risen, particularly during the price overhauls of 1965 and 1982.

The Basic Provisions passed by the Supreme Soviet called for thorough reform of the price structure by 1990, in time for use in the Thirteenth Five-Year Plan (1991-95). This price reform was more extensive than previous reforms, affecting both wholesale and retail prices. In the future, central authorities would establish far fewer prices, although all prices would still be closely monitored. Plans for reform provoked public controversy because the changes would end subsidies for many common items, such as meat, milk, fuel, and housing. Authorities promised a thorough public discussion of retail price changes and gave assurances that the living standards of workers would not decline.

Like prices, wages were a flexible tool by means of which the government influenced the economic scene. Until 1931 the regime attempted to enforce an egalitarian wage structure. Policy concerning wage differentials had fluctuated in later years, however. In some periods, ideology and egalitarianism were emphasized, whereas at other times the government used rewards and incentives. Beginning in 1956, when it established a minimum wage, the government made a concerted effort to improve the wages of those in the lower-paid categories of work and to lessen differences among workers. With the reforms of the 1980s, however, wage differentials were again increasing, with high-quality technical, executive, and professional skills being favored in the wage structure.

Precise information concerning wages, including the level of the minimum wage, was not publicly available in the late 1980s. Western analysts did not agree on the size of wage differentials, although these differences were generally considered to be smaller than was the case in the West. According to Western estimates, however, important party and government personages received as much as five times the average salary. Outstanding scientists and selected intellectuals also prospered.

The average worker received fringe benefits totaling about 30 percent above and beyond his or her salary. These benefits included free education and health care, paid vacations, and other government-subsidized services. In addition to wages, the regime used other incentives, such as cash bonuses paid to both individuals and groups of workers and "socialist competitions," to spur the work force on to greater efforts.

Data as of May 1989

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