The idea that Soviet economy was no good is so wide-spread that if you want to find out some details about it you can't. As funny as it sounds, that's true: try looking up Soviet Economy in Wikipedia, and you will find a lot of baloney about how it didn't work because a Plan couldn't catch up with consumers' demand, and the 1930 - 1970 section consists of 2 (!) tiny paragraphs, like "you know, nothing major happened during that period, so..". Well, this idea is about as rational as a statement that white Americans have always respected other races. "It may be true now, but... And the whole issue is a little bit more complicated than that..." Well, you get the point. So if you want to stay ignorant of the little inconvenient facts that just don't let you accept the common propaganda, this article is not for you. If you are actually interested in statistics that can help you get a clearer picture of what really happened - go on reading, you won't be disappointed.
It's hard to be objective about a topic that's still too important for the drivers of the propaganda machine to let people know all the truth about. In the 70s and 80s Russians weren't told anything bad about the system, and now they aren't told anything good. So I'll just stick to the numbers and try to make some sense out of hard facts.
First and foremost, you have got to understand the following: ONLY COMPLETE ECONOMIC IGNORANCE can create the idea of planned economy as a regulatory system that functions with the same level of efficiency regardless of the current economic state of a country, of the organizers' plans, of intellectual and organizational level of political power, and of current political state of a country. The same idea put the easy way: if an imbecile breaks a computer it doesn't mean that same computer can't be used somewhat more efficiently. And later on you will also see how that same computer can't even be tested for efficiency for it was whacked by a bunch of imbeciles.
1. Cadres decide everything!
The Stalin's quote above did not, in fact, mean that the Party must control everything. On the contrary, until Stalin's death (which meant that a lot of his capable followers in charge of the country's power had to step down) Party's rule was limited in the most important areas of political power: nationalized banking system, industry etc. But I am getting ahead of myself. 1930s were the years when Planned Economy actually started to be implemented. It was a big challenge for a country that only borrowed other nations' technologies and just began to build a nation-wide obligatory system of education. By that time it was already clear though that the current leaders did not have high enough qualification to properly manage the country. Stalin knew that, and part of the reason for the Great Purge of 1937 was that urgent need to let ardent well-educated young people take charge. Another very important change was the establishment of a system of control - party control, state control (Narkomgoskontrol), and of course National Security. This system of control is often criticized, but it is never mentioned that that system was corresponded perfectly to the very nature of command economy, and that it played the decisive role in modernization of the then agrarian society into an industrial state and one of the 3 top producers in the world. It's very important to mention here that the Great Purge itself was not exactly the best thing for helping the economy and it did create chaos and fear, but even this necessary means did not undermine economy's stability of the time which is another proof of its efficiency.
Several reforms in the late 1930s (including rationalization of governing the industry, special education centers preparing more qualified workers, wholesale prices reform, raising production quality standards, raising discipline, prolonging working day from 7 to 8 hours a day, etc.) created the basis of the new planned economy, and the results were quite inspiring. It is rather difficult to evaluate how production of consumer goods was developing because the main focus had been put on industrialization for purely military purposes. Stalin knew that the new emerging power (being the Soviet Bloc) would not be tolerated in the capitalist world (one can only wonder why is this obvious idea nowhere to be found in the present), so he realized that his only chance for survival lies in reorganizing and developing the military. Military production rose 2.44 times since 1937 until 1940, and in the same period its share in the total production rose from 10.4% to 22.5%. There are several works of Western economists that estimate Soviet Union's pre-war growth of GDP. Perhaps the most reliable source is Adam Bergson's "Economic Trends in The Soviet Union" where he states GDP growth of 18.2% for this period (which translates into something like 5-7% growth per capita - and this is quite astonishing considering the time and circumstances: military conflicts with Poland and Finland). British journalist Alexander Vert who lived in Moscow in 1941 wrote: "Even now, in July (the war had already started) there is no shortage of products whatsoever, especially in food and cigarettes", and a Soviet journalist Yuri Zhukov wrote in his journal: "There are no lines. You can easily buy chocolate, noodles, bread, a bicycle, or a suit".
2. Confidence in the new economy.
In the end of 1940 the new Plan for the next year was made, and it was truly optimistic. Such plans had been drafted before, but this was the first time it was actually made public which showed that the government had significantly more confidence in the Plan's success. And they had all the reasons to feel that way: the data for the first half of the year 1941 shows that industry growth rate was almost exactly the same as in the Plan - 114.5%, industrial transportation mileage was 10.8% higher than in 1940, growth of power production - 13.5%, oil - 11.1%, steel - 24.6%, etc. All of these numbers corresponded to the Plan. Of course, heavy industry and military products were ahead of the rest, but it's not to say that other areas were abandoned: considerable parts of budget went to developing free education and health care; financing science increased the number of people dedicated to scientific development by 15.6%.
3. Prison labor is the basis of totalitarian command economy.
Yeah, right. Prisoners, constituting about 1% of the total work force in the country (around 100 million people), were not used in the most important areas of economy - power plants, mechanical engineering, fuel production, transportation, let alone service sector. They did work in the North and in the Far East, but that was by no means the savior of the whole system to rely upon. And that is why releasing most prisoners in 1953 didn't cause economic collapse, - in fact, it didn't influence anything at all.
4. Decade of triumph of planned economy.
Most works criticizing planned economy talk about inefficient use of resources in the 30s and slowing down of economic growth in the period of 1960-1980. However these facts do not suffice to state the failure of planned economy because there was no decline in GDP and technical development, or for that matter in level of life present until 1990s when, although in stagnation, a functioning system of economy was dismantled to be replaced with a colonial natural resources dependent third world IMF run joke of an economy.
And even if we accept the claims about inefficiency and bureaucracy (we have to because both definitely existed since the 60s - which still doesn't undermine the functionality of the economy that served the purpose for 70 years), there was still one period in the economic history of the Soviet Union that is somehow never discussed: the 50s. It is never discussed for obvious reasons: economic development during that period was one of the fastest in the world, and that success had nothing to do whatsoever with either abusing prisoners or robbing common people of the products of their labor. This fact is so inconsistent with the whole picture of "inefficient command economy" that it's easier to just ignore it and never bring it up than to try to explain the dynamics of planned economy's development.
When calculating the real growth of GDP G. Hanin, a Russian Professor of Economics, used CIA reports along with fuel consumption in the USSR during that period (he didn't trust Soviet statistics), and according to him a big leap forward was achieved thanks to development in the service sector of economy. Presented below is a table with statistics about GDP growth in developed countries for the period of 1950-1960, the beginning of that period taken as 100%.
Countries ................1951-1955 . ......1956-1960. ......1951-1960USSR.................... ..162 .......................151 ................244
USA ........................124 .......................107 ................133
Great Britain ...........115 ........................110 ................127
France .....................124....................... 127 ................158
West Germany......... 154 .......................141 ................217
Japan ......................143 .......................177 ................253
As you can see here, the growth rate in USSR was higher than all other countries except Japan (and in the period of 1951-1955 it was actually the highest). (Living in Japan, I now understand the reason for their growth rate: deadly working hours and servile devotion to company). And one of the reasons such a result was achieved was high efficiency. Shown below is a table with industrial efficiency rates for the same countries in the same period of time:
Countries ................1951-1955 . ......1956-1960. ......1951-1960USSR.................... ..122 .......................120 ................146
USA ........................118 .......................114 ................134
Great Britain ...........111 ........................110 ................122
France .....................126....................... 126 ................159
West Germany......... 127 .......................120................153
Japan ......................192 .......................n/a ................n/a
Number of machine types used in production increased from 650 in 1950 to 3089 in 1959. This is to say that scientific development was very rapid as well, that is, if the first satellite, a nuclear power plant, and the first supersonic passenger jet flight in the world are not convincing enough. There were no real computers back then, but the first attempts at creating one in the USSR did not lag behind those performed in the USA either.
There was a significant increase in the level of life during the 50s. Consumption of such products as meat, milk, sugar, fruits and vegetables grew 1.5 to 2 times. Sales of consumer goods, such as watches, radios, bicycles, motorbikes and sewing machines increased several times, and TVs, washing machines and refrigerators started to be mass produced, though still in low quantities. Apartment buildings construction (apartments were given for free to those who needed housing) increased 2.5 times, and for the first time in history the country was slums free.
One certain indicator of the attempts to increase level of life (such as financing free health care) was increased life expectancy which reached 69 years - the level of the most developed countries in the world. Poverty was eradicated and cultural life flourished, while working day was cut back to 7 hours a day. During the 1950s budget share of science, health care, and education was among the highest in the world. Another great achievement of that time was high financial stability: increasing national budget, insignificant inflation (and even slight deflation in the beginning of 50s), - such stability is a most rare case in the times of fastest economic growth, and it was achieved mainly due to high efficiency and effective system of control over production and distribution.
Despite 3 wars and great losses of resources, people, and time USSR managed to develop into the 2nd most powerful country in the world, and yet we only hear about the "German economic miracle" and the "Japanese economic miracle". Have you ever heard of the "Soviet economic miracle"?..
Conclusion
So why did the USSR collapse? Well, this is a whole other story, but one that is clear now: SOMETHING had to collapse. We don't say that Ghana collapsed or Ecuador collapsed because there was never much that could collapse in the first place, no offense to those beautiful countries. We can only talk about the Cold War between the 2 most powerful countries in the world because something made them powerful. But somehow it is never assumed that planned economy could be the system that brought the empire of the USSR to its existence. Is it maybe because we remember best what happened last? Or is it just because we never think and simply take whatever the propaganda machine feeds us with? Whatever the case, it is clear now that planned economy, as a system of running a country economy, however large, can be highly effective.
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