Industry develops, but growth does not
One joke that Muscovites tell about their economic system involves Stalin, Khrushchev and Brezhnev, who are riding a special train. When the engine breaks down, Stalin has the crew shot. Nothing happens. After a while, Khrushchev rehabilitates the engineers. Still no movement. Finally, Brezhnev pulls down the shades and sighs, "Well, let's pretend we are moving."
In recent months Soviet leaders have had a hard time pretending they were moving. After more than half a century of often spectacular progress in building heavy industry, the Soviet economy has slipped into a serious slump. While growth zipped along at 5.3% annually from 1966 to 1970 and was a strong 7.2% as late as 1973, it fell to an almost invisible .7% last year. Steel production, always regarded as a major sign of a healthy Soviet economy, declined by 1.6% last year — the first drop since World War II.
Instead of delivering on its promise to create a workers' paradise with ample material goods for all, Marxism-Leninism as practiced by Moscow has fashioned something of an inertia-bound bureaucracy that limits incentive and suppresses inventiveness. Says Economist Judith Thornton of the University of Washington: "Imagine a whole economy organized and run like the Department of Energy or the Pentagon. Of course, there is a problem. Public organizations work less efficiently than do private ones, which are eliminated if they are not competitive." The law of the land for the Soviet economy is the national Five-Year Plan. The State Planning Committee (GOSPLAN) allocates all investment capital, sets every price and production goal and determines all foreign trade. The plan, which sets policy for some 350,000 enterprises, affects every Soviet citizen. Lawyers must try their quota of cases, barbers must shear so many heads and taxi drivers must log so many miles. The plan determines the amount of raw materials a plant will receive and the number of workers it is assigned; fulfilling the plan's quotas is the only economic measuring stick.
Soviet economists would argue that it was only by following government dictates that the country was able to recover from the devastation of World War II. Following massive investments of both capital and labor, agricultural output has risen by an average of 3% annually since 1953. Even though the diet remains starchy and the nation's overburdened and inefficient distribution system produces periodic shortages of everything from pork to potatoes, per capita food consumption has nonetheless more than doubled since 1951, a feat unmatched by any other advanced nation. Industrial growth has also been heady; the Soviet gross national product, a mere 40% of the U.S.'s in 1955, is 60% today.