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Soviet Union [USSR] 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 Soviet Union USSR - 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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