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Soviet Union [USSR] The Twelfth Five-Year Plan, 1986-90
When Gorbachev attained power in 1985, most Western analysts
were convinced that Soviet economic performance would not improve
significantly during the remainder of the 1980s. "Intensification"
alone seemed unlikely to yield important immediate results.
Gorbachev tackled the country's economic problems energetically,
however, declaring that the economy had entered a "pre-crisis"
stage. The leadership and the press acknowledged shortcomings in
the economy with a new frankness.
Restating the aims of earlier intensification efforts, the
Basic Directions for the Economic and Social Development of the
USSR for 1986-1990 and for the Period to the Year 2000 declared
the principal tasks of the five-year plan period to be "to enhance
the pace and efficiency of economic development by accelerating
scientific and technical progress, retooling and adapting
production, intensively using existing production potential, and
improving the managerial system and accounting mechanism, and, on
this basis, to further raise the standard of living of the Soviet
people." A major part of the planned increase in output for the
1986-90 period was to result from the introduction of new machinery
to replace unskilled labor. New, advanced technologies, such as
microprocessors, robots, and various computers, would automate and
mechanize production. Obsolete equipment was to be retired at an
accelerated rate. Industrial operations requiring high energy
inputs would be located close to energy sources, and increasing
numbers of workplaces would be in regions with the requisite
manpower resources. Economic development of Siberia and the Soviet
Far East would continue to receive special attention.
Gorbachev tackled the problem of laxness in the workplace and
low worker productivity (or, as he phrased it, the "human factor")
with great vigor. This attention to individual productivity and
discipline resulted in the demotion or dismissal of influential
older officials who had proved to be corrupt or inefficient.
Gorbachev called for improved motivation among rank-and-file
workers and launched a vigorous antialcohol campaign (also a
priority under Andropov).
At the Central Committee plenum in January 1987, Gorbachev
demanded a fundamental reassessment of the role of the government
in Soviet society. His economic reform program was sweeping,
encompassing an array of changes. For example, it created a new
finance system through which factories would obtain loans at
interest, and it provided for the competitive election of managers
(see Soviet Union USSR - Reforming the Planning System
, this ch.). These changes
proceeded from Gorbachev's conviction that a major weakness in the
economy was the extreme centralization of economic decision making,
inappropriate under modern conditions. According to Abel
Aganbegian, an eminent Soviet economist and the principal scholarly
spokesman for many of Gorbachev's policies, the Soviet Union was
facing a critical decision: "Either we implement radical reform in
management and free driving forces, or we follow an evolutionary
line of slow evolution and gradual improvement. If we follow the
second direction, . . . we will not achieve our goals." The country
was entering "a truly new period of restructuring, a period of
cardinal breakthroughs," he said, at the same time stressing the
leadership's continuing commitment to socialism.
In one of his most controversial policy decisions, Gorbachev
moved to encourage private economic activities and cooperative
ventures. The action had clear limits, however. It established a
progressive tax on profits, and regulations limited participation
mainly to students, retired persons, and housewives. Full-time
workers could devote only their leisure hours to private
activities. Cooperatives that involved at least three people could
engage in a broad range of consumer-oriented activities: using
private automobiles as taxis, opening private restaurants, offering
private medical care, repairing automobiles or appliances, binding
books, and tailoring. In addition, the reform encouraged state
enterprises to contract with private individuals for certain
services. Other regulations gave official approval to the
activities of profit-oriented contract brigades. These brigades
consisted of groups of workers in an enterprise or collective farm
who joined together to make an internal contract with management
for performance of specific tasks, receiving compensation in a lump
sum that the brigade itself distributed as it saw fit. Additional
decrees specified types of activities that remained illegal (those
involving "unearned income") and established strict penalties for
violators. The new regulations legitimized major portions of the
second economy and permitted their expansion. No doubt authorities
hoped that the consuming public would reap immediate, tangible
benefits from the changes. Authorities also expected these policies
to encourage individuals who were still operating illegally to
abide by the new, more lenient regulations.
In keeping with Gorbachev's ambitious reform policies, the
specific targets of the Twelfth Five-Year Plan (1986-90) were
challenging. The targets posited an average growth rate in national
income of about 4 percent yearly. To reach this goal, increases in
labor productivity were to average 4 percent annually, a rate that
had not been sustained on a regular basis since the early 1970s.
The ratio of expenditure on material inputs and energy to national
income was to decrease by 4 to 5 percent in the plan period.
Similar savings were projected for other aspects of the economy.
The plan stressed technical progress. Machine-building output
was to increase by 40 to 45 percent during the five-year period.
Those sectors involved in high technology were to grow faster than
industry as a whole. The production of computers, for example, was
to increase 2.4 times during the plan period. Growth in production
of primary energy would accelerate during the period, averaging 3.6
percent per year, compared with 2.6 percent actual growth per year
for 1981-85. The plan called for major growth in nuclear power
capacity. (The Chernobyl' accident of 1986 did not alter these
plans.)
Capital investment was to grow by 23.6 percent, whereas under
the Eleventh Five-Year Plan the growth rate had been only 15.4
percent. Roughly half of the funds would be used for the retooling
necessary for intensification. The previous plan had earmarked 38
percent for this purpose. Agriculture would receive large
investments as well.
The plan called for a relatively modest improvement in the
standard of living. The share of total investment in services was
to rise only slightly, although the proportion of the labor force
employed in services would continue to grow.
The regime also outlined very ambitious guidelines for the
fifteen-year period beginning in 1986. The guidelines called for a
5 percent yearly growth in national income; national income was
projected to double by the year 2000. Labor productivity would grow
by 6.5 to 7.4 percent per year during the 1990s. Projected
modernization of the workplace would release 20 million people from
unskilled work by the year 2000. Plans called for increasingly
efficient use of fuels, energy, raw materials, metal, and other
materials. The guidelines singled out the provision of "practically
every Soviet family" with separate housing by the beginning of the
twenty-first century as a special, high-priority task.
Results of the first year of the Twelfth Five-Year Plan, 1986,
were encouraging in many respects. The industrial growth rate was
below target but still respectable at just above 3 percent.
Agriculture made a good showing. During 1987, however, GNP grew by
less than 1 percent, according to Western calculations, and
industrial production grew a mere 1.5 percent. Some problems were
the result of harsh weather and traditional supply bottlenecks. In
addition, improvements in quality called for by Gorbachev proved
difficult to realize; in 1987, when the government introduced a new
inspection system for output at a number of industrial enterprises,
rejection rates were high, especially for machinery.
Many of Gorbachev's reforms that immediately affected the
ordinary working person--such as demands for harder work, more
rigid quality controls, better discipline, and restraints on
traditionally high alcohol consumption--were unlikely to please the
public, particularly since the rewards and payoffs of most changes
were likely to be several years away. As the Nineteenth Party
Conference of 1988 demonstrated, party leaders continued to debate
the pace and the degree of change. Uncertainty about the extent and
permanence of reform was bound to create some disarray within the
economy, at least for the short term. Western analysts did not
expect Gorbachev's entire program to succeed, particularly given
the lackluster performance of the economy during the second year of
the Twelfth Five-Year Plan. The meager results of past reform
attempts offered few grounds for optimism. But most observers
believed that at least a portion of the reforms would be effective.
The result was almost certain to benefit the economy.
* * *
The economic reforms of the mid-1980s have attracted the
attention of many Western observers. As a result, English-language
sources of information about the new measures are plentiful. An
especially useful compendium of reports about the changes is
Gorbachev's Economic Plans, produced by the United States
Congress. An earlier collection of reports submitted to the United
States Congress, entitled The Soviet Economy in the 1980s,
remains useful. Valuable analyses of the "traditional," pre-reform
Soviet economy, still essential for an understanding of the nature
and extent of the reforms of the mid- and late 1980s, may be found
in The Soviet Economy, edited by Abram Bergson and Herbert
S. Levine, and in Modern Soviet Economic Performance by
Trevor Buck and John Cole. For ongoing observation and commentary
on the changing economic scene, the interested reader may consult
current issues of the periodicals Soviet Studies and
Soviet Economy as well as relevant issues of the Joint
Publications Research Service. For earlier development of the
Soviet economy, standard works such as Maurice Dobb's Soviet
Economic Development since 1917 and Alec Nove's An Economic
History of the U.S.S.R. remain indispensable. (For further
information and complete citations,
see Soviet Union USSR -
Bibliography.)
Data as of May 1989
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