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Soviet Union [USSR] ECONOMIC STRUCTURE
The economy of the Soviet Union differs significantly from
market economies; the country's massive and diverse economic
resources are largely state owned. The central government controls
directly or indirectly many aspects of the labor force, the retail
and wholesale distribution system, and the financial system.
Nature of the National Economy
The Constitution of 1977 declares that the foundation of the
economy is "socialist ownership of the means of production"
(see Soviet Union USSR - The 1977 Constitution
, ch. 8). The Constitution recognizes two
forms of socialist ownership: state ownership, in which all members
of society are said to participate, and various types of collective
or cooperative ownership. According to
Marxist-Leninist (see Glossary) theory, the former is
more advanced, and the Constitution
calls for its expansion. It is the most extensive form of ownership
in the economy, incorporating all major industrial entities: the
banking, transportation, and communication systems; a majority of
trade and public services; and much of the agricultural sector. In
the late 1980s, collective ownership was found primarily in
agriculture, the small workshops of crafts people, and some retail
trade and services. In 1989 a law was passed allowing an increase
in the number and kinds of cooperatives.
The Communist Party of the Soviet Union (CPSU) and, as an
adjunct of it, the government set goals and choose priorities for
the economy. Traditionally, the government has determined economic
policy in considerable detail through its planning agencies at
various levels and has issued specific instructions to individual
economic units concerning quantity and type of production expected
of them, wage levels and incentive funds permitted, and, to a large
extent, investment policies. Control of the economy has been
exerted through a hierarchy of planning agencies that interact with
appropriate government and party organs to devise and implement
policy to achieve these goals. Various past reform efforts have
altered the specific functions and assignments of the components of
the economy, but the basic hierarchical structure has remained
intact since its inception during the 1920s
(see Soviet Union USSR - Planning Process
, this ch.).
All-union (see Glossary) planning and control for each major
sector of the economy is handled by relevant branch ministries,
subordinate to the Council of Ministers and aided by a variety of
planning agencies
(see Soviet Union USSR - Administrative Organs
, ch. 8). Between the
ministries and the functioning
enterprises (see Glossary), a
variety of bodies, such as
combines (see Glossary),
trusts (see Glossary), and production associations (groups of
formerly separate
enterprises) join together entities representing aspects of
production in a given area of the economy. On this level, periodic
restructurings have been attempted to achieve greater efficiency
(see Soviet Union USSR - Reforming the Planning System
, this ch.).
In 1985 industry, composed of about 45,000 enterprises and
production associations, accounted for 45.6 percent of
net material product (see Glossary), according to official statistics. The
agricultural sector, organized into
collective farms (see Glossary)
and
state farms (see Glossary), produced 19.4 percent of net
material product. Transportation and communications accounted for
10.7 percent, and the distribution system accounted for 18.2
percent
(see Soviet Union USSR - Retail and Wholesale Distribution System
, this ch.).
The 1977 Constitution permits individuals to be self-employed,
with certain restrictions. Until the late 1980s, however, the
authorities strongly discouraged the practice. Citizens may own
personal property, such as a dwelling or an automobile, and may
sell this property as "used" merchandise or bequeath it as they
choose. They may also sell products they have themselves made.
Traditionally, they have not been permitted to act as middlemen for
profit or to hire the labor of other citizens for personal gain,
i.e., to engage in private enterprise as it is understood in the
West. Nevertheless, alongside the official economy a "second
economy" has long flourished, made up of private individuals
offering goods and services to consumers, who have traditionally
been inadequately served by the state services sector. Such
activities have included those that were simply private, illegal,
or of questionable legality.
The existence of many illicit business activities, operating
outside state controls, was freely admitted and deplored by
authorities and the official press of the 1980s. Upon assuming
power in March 1985, Gorbachev adopted a new approach to the
problem. In a major departure from past policies, on May 1, 1987,
it became legal for individuals to go into a variety of business
activities on their own or in cooperation with others
(see Soviet Union USSR - The Twelfth Five-Year Plan, 1986-90
, this ch.).
Data as of May 1989
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