Born into the NEP Years: The First Five-Year Plan. Life and Fate

The transition to the New Economic Policy (NEP) marked a new stage in the relationships between the authorities and the scientific intelligentsia. In the opinion of economic historian N.M. Yasnyi, ideological control over the science of economics was relatively loose¹ in the 1920s and the first half of the decade in particular. Direct links with the State Planning Committee (Gosplan) provided an opportunity not only to draw upon an abundance of statistics, but also to employ commentaries of specialists from the agency departments. In resolving problems associated with the project of industrialization, they significantly outpaced the economic thought of the West on multiple fronts. It was made possible to do justice to their contribution only three or four decades later during a crisis of Keynesian and institutional economic policy. Additionally, the then devised thoughts cover contemporary relevant equilibrium mechanisms as the subject matter of economic science and equilibrium mechanisms as the subject matter of socioeconomic genetics, matter of factors and the institutional framework, their roots and causes of disintegration, and selection mechanisms.²

The first five-year-plan adopted by the Fifth Congress of Soviets in May 1929 appeared as a unique phenomenon. In its three volumes, the sector-specific components of the country’s modernization dovetailed with issues of a social nature and various aspects of regional development. The regional approach proved to be the most innovative from the perspective of global economics. In 1926–1929 Gosplan largely focused on elaboration of the district and inter-district issues of the five-year-plan within the scope of economic regionalization. Conferences were held to accomplish this goal on complex accounting of resources and setting specific targets within the industries and large economic regions.³ Specialization of the krais and oblasts took shape considering the best use of the wealth of their resources and an increase in the performance of “laggards.” This also involved defining the perspectives for interdistrict cooperation and forecasts of the development of large regions, such as the Urals (Ural oblast) and Siberia (Siberian krai).

The country marched into the first five-year-plan with the best option for the latter. It appeared to be a relatively realistic document that flagged the main lines of economic development instruments for their realization. It suggested “involvement of different classes in addressing the industrialization objectives,” as well as equality among all systems of cooperative societies and acceptance of individual peasant households as a principal agricultural producer that “had not lost importance to date.” Thus, it embraced everything that unambiguously implied pursuing to retain a mixed economy, on the one hand, and to take a quantum leap in engineering and metallurgical industries, in particular, and to carry out a large-scale construction of the new and modernization of old enterprises, on the other hand.

I.V. Stalin and his coterie can be held directly responsible for reckless profligate spending of multibillion budgets and millions of deaths, since the cost of abandoning the NEP policy proved to be enormous. The industrial project, which was the state policy instrument, twisted into a self-fulfilling prophecy. A target to “catch up with and surpass the industrial development level of the leading capitalist countries within the historically shortest time spans” was met largely due to the quantitative indicators. On the contrary, social policy transformed from a major component of the path to “socialism” into a one of secondary importance, thus, having devaluated its stipulative meaning.

Official publication of the “Results of Fulfillment of the First Five-Year-Plan for the Economic Development of the Union of SSRs” was unveiled in 1933. It was supposed to justify Stalin’s narrative around his idea that a large share of the public sector in production and industrial manufacturing, as well as the kolkhoz and sovkhoz sector in agriculture, should be treated as an indicator of the development stage of the “socialistic” structure. It highlighted a significant overfulfillment of the five-year-plan during the initial years by all targets. This basically indicates that relatively high growth rates should be attributed to a scale of building activities, including construction of a number of industrial giants not scheduled by the plan. The task of developing the factory and plant equipment proved to be far more complex: even according to official figures, the plan for gross output was fulfilled as low as 93.7%.⁴

Shifts in the economy based on quantitative indicators were characterized as “triumphant,” but only against the background of the global economic crisis. The idea behind the statement that the Soviet Union had caught up with the developed capitalist countries based on the share of production and industrial manufacturing in the national income, as well as on the share of production of capital goods (the means of production) was to prove the “preeminence of the socialist system over the capitalism.” The “Results” reported little if any data at all, having been founded on the international statistics. Thus, it was reported that, “against the foreign commerce scale-back, the Soviet share in global trade had increased and the Soviet Union had progressed from the 17th place in 1928 to the 11th position in 1932.”⁵

Importantly, characteristics of the results of the five-year-plan for decades to come were defined by Stalin’s wording from the Report by the General Secretary in the Plenary Meeting (Plenum) of the Central Committee (TsK) and Central Control Commission (TsKK) of the All-Union Communist Party of Bolsheviks (VKP(b)) (January 7–12, 1933) during the Soviet period. Thus, the spirit of official propaganda directives imbued the article devoted to the creation and evolution of the first five-year-plan. The emphasis was placed on congresses of specialists of Soviet planning. The “Starting” and “Optimal” plan versions prepared in August 1928 by Gosplan staff were stigmatized as opportunistic, since they were “developed with the involvement of bourgeois economists and technicians who attempted to detract from the resources and rates of industrialization in their projects and evaluations.” In view of this, the variants built on the “technical feasibilities” were perceived as “afflicted with intrinsic vice, that is, a minimalism.” Blame for the inexcusable error was put on Gosplan, “Not a single variant set a mission to reduce the share of private capital.”⁶

A leading Soviet industrialization researcher V.S. Lel’chuk wrote decades later in a similar vein. He additionally pointed out, however, that “laying the groundwork for industrialization” was accompanied by a “shrinking of the reach of economic control levers,” “poor labor culture,” and “lax labor discipline,”⁷ that is, by those large-scale phenomena that the General Secretary had omitted in his report in 1933. In the conditions of a stringent ideological and police-exercised control, withholding the exact information nurtured an incipiency and consolidation of Stalin’s mythology.

The dogma was put under the microscope as late as at the end of the 1980s, Reassessment of a truly scientific quality, however, was made during the post-Soviet era. Thus, N. Vert took cognizance of the manipulative method for quantitative indicators. Stalin tallied the results of the first five-year-plan using figures from the original variant of the plan adopted by the Fifth Congress of Soviets in April–May 1929 and subsequently abandoned due to “deliberately underestimated indicators,” rather than the one adopted under his duress in 1930.⁸ Fair to say, the “chief” merely repeated the trick of V.M. Molotov. A year earlier at the 17th All-Union Party Conference (February 1932), the Head of the Government had announced accomplishment of the goals of the plan based on its “optimal variant” and had been very reticent on the process of rampant capital investments in production and industrial manufacturing, which amounted to extra-budgetary 57% in 1930 and 80% in 1931.⁹

British historian R.W. Davies should be commended for grasping the challenge of unbiased examination based on a broad spectrum of sources of not only the total cycle of the USSR socioeconomic development, but also interpretation of the five-year-plan results by the Soviet officials. He wrote rather ironically, “The first item on the agenda of the plenum of the party central committee … was boldly entitled ‘The Results of the First Five-Year Plan, and the National-Economic Plan for 1933—the First Year of the Second Five-Year Plan’.” “Boldness” lay in the fact that the results of 1932 and with that, the entire five-year-plan were measured as early as a week after the end of the calendar year, whereas technical performance capabilities for proper accounting required different, significantly greater time spans. This statement is additionally corroborated by the fact that three reports on the five-year-plan results (by Stalin, Molotov, and Kuibyshev, as well as a speech by Ordzhonikidze) appeared in the press with only minor changes as compared with stenographic reports in the archives.¹⁰ Thus, it can be argued that the reports prepared beforehand employed the analysis of statistical indicators just nominally.

Davies arranged the events in chronological order: after summing up the results of the year (!), the Political Bureau (Politburo) decided on the size of future capital investments on December 3, 1932. On January 5, 1933, the Council of People’s Commissars (SNK) adopted a secret decree “On the State Budget and Economic Plan for 1933” based on this decision. The secrecy of the capital investment allocations was deeply embedded in the administration practice, thus, governing not only, e.g., the ratio of prescribed expenditures (1.450 billion rubles) and actual (4.178 billion rubles) defense allocations in 1933,¹¹ but also the general confidentiality of data on the real financial policy of the state.

Stalin’s slogan on “successful and early completion of the five-year-plan in four years and three months” determined the focus and tone of the addresses at the Plenum. Even the Politburo members who were responsible for the real sectors of the economy and, therefore, more deeply aware of the state of affairs found themselves “shackled together with a chain” of ideologically biased conclusions and judgments. Rather controversial claims of the General Secretary about the “birth of all the most advance industrial branches over the period of 1928–1932,” “resolving the grain problem,” etc., were undebatable. Altogether, debates on socioeconomic problems at plenums in 1928–1929 receded into the remote past.

The heightened emotionalism of the Stalin’s speech hindered an objective review of realization of the plan. By implication, the resolution of the Plenum of the TsK hailed the report on the first five-year plan and directives for the plan for 1933.¹² According to O.V. Khlevnyuk, “the first five-year-plan was never accomplished considering the key parameters. The figures declared, such as one hundred percent growth in industrial production between 1928 and 1932, were a lie. The real indices were approximately half that…. In 1932, labor productivity in large-scale industry actually decreased compared with 1928.”¹³ The large-scale propaganda that replicated Stalin’s narrative of “giant plants unparalleled in the world,” “rights and freedoms of Soviet people,” was only partly successful. The results of the five-year-plan turned out to be so far apart from that projected at the behest of the Party leader that Stalin had every reason to be concerned with his fate. The General Secretary also strove to keep the target–performance comparison at bay in January 1933 by having, in fact, remained silent throughout 11 sittings of the 17th party conference unwilling to enter into debate on causes of the apparent crisis in the economy.¹⁴

The veil of the mythology, however, continued to be “torn up” by speeches about the quality of the products and cost-accounting (khozraschet) relations. The issue was not only the stance of the directors’ corps already displayed earlier at the First All-Union Conference of Socialist Industry Workers in 1931.¹⁵ A speech delivered on January 31, 1932, by Politburo member Ya.E. Rudzutak carried an “information bomb.” The poor quality of the majority of factory products had never been a secret for the delegates. But specifying the figures, i.e., as much as a quarter of that produced, took great courage.¹⁶ The value of the industrial output of 1931 was assessed by Ordzhonikidze at 11.8 billion rubles. In essence, up to 3 billion rubles went down the rathole. In a matter-of-fact way, Rudzutak gave strict negative feedback to the policy of radically forcing the pace of economic growth. The degree of Stalin’s discontent can be illustrated by the fact that four days after the speech, Rudzutak was downgraded from a member to a candidate member of the Politburo.

The economy was in dire straits, which had been admitted by all the Politburo members by August 1932, nevertheless.¹⁷ The anti-crisis measures proposed by Stalin and senior officials of the People’s Commissariats (Narkomat), however, drastically diverged. Thus, the People’s Commissar of Finances G.F. Grin’ko appealed to give precedence to quality indicators. This sparked a backlash in Stalin who made it clear that “we consider the five-year program to be minimal. The annual control figures that will step up the five-year plan from year to year have yet to come.”¹⁸

If not at the rope’s end, but at least awaiting criticism, Stalin was preparing a milieu for policy adaptation. This, however, required a number of conditions, including persistent buildup of negative attitudes on the part of the recent comrades-in-arm, that is, right wing (recognizing the rectitude of the former head of the Council of the People’s Commissars of the Soviet Union A.I. Rykov and his supporters would have been political suicide for the General Secretary); elimination of even the negligible amount of criticism of the policy pursued; ban on information disclosure about the actual shifts in the economy; and praising the General Secretary as the “wise leader and successor of Lenin.”

The report delivered by Stalin at the Plenum on January 7, 1933, appeared in Pravda only three days later. At least four groups of statements can be distinguished in the text. The first concerned summing up the results of the five-year plan in production and industrial manufacturing. The adamant refrain, “We had no… We have one now,”¹⁹ had a spellbinding effect on the plenum participants, was repeatedly cited by the TsK, and laid the groundwork for propaganda events. The reality proved entirely different. For example, the aircraft industry of Russia manufactured 1287 aircrafts and 639 engines in 1916.²⁰ Russia was not far below France in the production of ferrous metals and coals. Stalin’s claims that “Russia had ranked the lowest in the production of petroleum products and coal before 1917” did not hold up to scrutiny considering that at the turn of the 19th–20th centuries, the nation produced more oil than any country in the world, second only to the United States in kerosene production.²¹

As early as at the 16th Congress, Stalin introduced a cliché, “We inherited from capitalism almost the complete absence of national machine building.” His subordinates had to resort to shuffling to particularize this message. Thus, Chairman of the Supreme Board of the People’s Economy (VSNKh) V.V. Kuibyshev proclaimed, “During the prewar years, the machine building industry produced approximately 307 million rubles worth output in comparable prices (adjusted to prices of 1926/1927).”²² In point of fact, in 1913 the production value equaled 820 million rubles (703 million in 1928/1929) in Russian machine-building industry and metalworking.²³ One year later, Stalin pointed out in the accounting report at the 17th Party Congress that machine building had accounted for 11% of the Russian industrial gross output in 1913.²⁴ The general conclusion of this section of the report consisted in the global assertion that over the five-year-plan period we succeeded in “transferring our country, with its backward, and in part medieval, technology, onto the lines of new, modern technology.”²⁵ The General Secretary did not provide any other evidence to support the foregoing theses.

The second group touched upon the five-year-plan results in the agricultural sphere. The main argument to substantiate collectivization consisted in an increasing the volume of state procurement (zagotovki) to “1.200 to 1.400 billion poods of marketable grain annually, instead of the 5–6 billion poods that were procured in the period when individual peasant farming predominated.”²⁶ Nearly the entire composition of the plenum was “yoked” solid in participation in forced collectivization. But in 1930, the then chairman of SNKh of the RSFSR S.I. Syrtsov articulated the losses in animal husbandry during the first months of collectivization, “Wrongs and oppression in the course of collectivization resulted in losses worth three billion rubles in animal husbandry alone.”²⁷ For comprehension of the scale of the economic and social distress, it should be recalled that, according to resolution of the November (1929) Plenum, capital investments to production and industrial manufacturing and electrification for 1929/1930 were to increase by 43%, that is, from 2.8 billion rubles by the “optimal variant” of the plan to 4 billion.²⁸ The slaughtering of a large number of horses by peasants resulted in a situation in which collectivization proceeded without an adequate resource base. The aggregate engine capacity of tractors soared from 0.27 million horsepower (hp) to 2.1 million hp in the years 1928–1932. Even so, the aggregate draft capacity was 21–22 million hp in 1932 against 28 million hp in 1928.²⁹

Stalin’s variant of the village modernity project was molded by the Civil War; this was in fact a prodrazverstka (confiscation of specified quotas of food). The food and seed stock were commonly collected in villages in 1930, which was the most productive year in terms of climate. At the same time, grain loss during harvesting accounted for approximately 22% of the gross yield in kolkhozes. As a result, loans had to be provided from public funds in the amount of 75.4 million poods³⁰ due to large-scale famine. The famine was the gravest manifestation of collectivization, the consequences of which killed 5.6 million people, including 2.5 million in Ukraine.³¹

Stalin was well aware that gross agricultural output contracted by 6–7% rather than increased over the five-year-plan period, while the plan envisaged a significant improvement from 2.99 billion to 5.3 billion rubles by the starting variant and up to 6.4 billion rubles by the optimal.³² The peasantry could have ramped up the marketable products by 2.4–3.5 billion rubles providing continuation of the NEP model through the development of cooperative, agricultural machinery building, etc.

Nowhere but in this segment of the report was the mythological veil exposed so massively! There is no coincidence that, as Stalin perfectly realized the stretch of these conclusions, he delivered another report, which was unplanned for and not on the agenda, “On Party Work in the Village”³³ on Janua-ry 11 (published in Pravda on January 17). He elaborated at length on what had happened and admitted that in 1932 “we experienced greater difficulties in state procurement of bread than in the previous year.” Kolkhoz and sovkhoz workers were to blame as they failed to perceive the “downsides” of allowing the kolkhozes to sell some of their products on the market. Authorizing the sale implied legalization of the market price for grain and, hence, giving peasants a choice. In Stalin’s opinion, the mission of the rural communists should have been “in every possible way to enhance and urge bread procurement from the very first days of harvesting beginning July 1932.” Violence as a basic collectivization method had apparently come to stay. Furthermore, it was reinforced by administrative measures; an explicit reference was made in a decree by SNKh of the Soviet Union and TsK of the VKP(b) “On a Schedule for Bread Procurement from the Harvest of 1932 and Unfolding of Kolkhoz Bread Sale” dated May 6, 1932, that “kolkhoz bread sale may not be opened until the bread procurement plan has been carried out wholly and completely.”

Stalin highlighted “clogging” of kolkhozes by “exes” from among the former “kulaks” and “white-army” soldiers and officers, officials, white-collar workers, etc. Moreover, the mere fact of uniting the peasants in collective farms threw a scare on him due to the potential exposure of rural residents to untoward information and agitation. Thus, the tentative retreat from collectivization upheaval turned out to be just a brief respite from further sliding toward the pathway to violence, whereas the Plenum participants were offered an explicitly mythological thesis on “transformation of the Soviet Union into the state with the world’s greatest agriculture.”³⁴

The third group of statements was intended to explain the practice of a “breakneck pace,” all difficulties and hardships that befell the people during the five-year-plan period, as well as the causes behind the failure to meet the planned targets. An external factor, “refusal of the neighboring countries to sign nonaggression pacts with us and the complications that arose in the Far East,” was largely to blame. This resulted in obliging “for the purpose of strengthening our defense, hastily to switch a number of factories to production of modern defensive means.”³⁵ Stalin’s mannerism of absolving himself of responsibility for ghastly blunders and crimes and shifting it onto local personnel and capitalistic encirclement, in particular, had persisted since spring 1930, which was a time of brinkmanship, having threatened another Civil War in the rural areas. But there emerged an entirely new point, i.e., a repeated emphasis on inalterability of the policy of the early 1930s.³⁶ No analytical comparisons between the five-year-plan variants were made by the General Secretary. He focused on portraying horrific scenarios caused by withdrawal from the “breakneck pace” policy.

The fourth group was concerned with a change in orientation of the economic policy. A complex of domestic and foreign-policy causes (chaotic economic ties, financial crisis, soaring external debt, etc.) precluded further “whipping and spurring the country.” In essence, we are facing abandonment of the five-year-plan policy and feeble denial (and even condemnation in a number of points).³⁷ During the second five-year-plan period, center stage was taken by mastering the machinery at old or renovated factories and plants, which required improvement in the skills and qualifications of workers and engineering and technical personnel.³⁸ But note his “caveat,” in that “over the first two–three years of the second five-year-plan, in particular.” This implied that the years 1933–1935 were devoted to stabilization of the situation, including due to deviation from the priority of coercive measures.

Specialists (staff of the People’s Commissars and representatives of directors’ corps) heard not a word from their leader about cost-accounting, which was a centerpiece of the “mini-reform” policy. Propaganda clichés repeatedly highlighted a special section of Stalin’s speech at the meeting of economic executives on June 23, 1931, that pointed out, “owing to inefficient management, the principles of business accounting are grossly violated in a large number of our factories and business organizations. It is a fact that … proper accounts, calculations, the drawing up sound balance-sheets of income and expenditure have long ceased to be kept.”³⁹ His true attitude, however, Stalin expressed in his letter to L.M. Kaganovich dated August 6, 1931, that the bourgeois approach to profitability must be severely criticized.⁴⁰ In a system of “socialist economy” coordinates, khozraschet appeared viable in the domain of law, but it could only be put into practice beyond the bounds of the legitimate economy. It is not by a mere coincidence that the onset of the interlocking of the command and shadow economy dates back to the early 1930s.⁴¹

Foreign economic relations also remained unaddressed, even considering the “almost total reliance of Soviet industrialization on foreign technologies.”⁴² But this, indeed, was not surprising, since mythological constructs comprise not only words, but also apophasis. Therefore, analysis of the report delivered on January 7, 1933, shows that Stalin’s openness to changes was conditional and of temporary nature. Pragmatism always collided with ideological dogmatism in critical situations. The discordance between two essentially conflicting policies, that is, rational–technocratic and voluntaristic, should have been resolved through repression of real or potential discontent.

An automatic expansion of Stalin’s wordings to the party doctrine provisions is an important feature of the reality in those years. Tellingly, Molotov who addressed congress the next day started off with a sacramental phrase, “The report by Comrade Stalin settles the question about the results of the First Five-Year-Plan.”⁴³ As if in corroboration, the Pravda issue of January 12 that published the speech of the Government Head was attended by a page, which contained carefully culled public “talks” of the working class under a general headline, “Masses Saluted Report of the Party Leader Com. Stalin with a New Wave of Enthusiasm, Initiative, and Labor Drive!”

In itself, Molotov’s report “On Tasks of the First Year of the Second Five-Year-Plan” in fact just refined selected points of Stalin’s statements, while replicating even the structure of the General Secretary’s language. Divergences were just nominal and amounted to nonspecific phrases regarding the scale of defective products, low utilization rate of machine tools, and the significant quantity of the installed but nonoperating machinery. The general conclusion of the report was couched in tune with the economic policy turnabout agreed upon among the VKP(b) leadership as early as at the end of 1932.⁴⁴ Improvement in labor productivity was proclaimed to be the main task in production and industrial manufacturing; the quality of the products should be brought into focus, rather than the quantitative indicators. Directions for the ways to achieve the set goals, however, imitated the language of the TsK and SNKh decrees of the “breakneck pace” times, “we need only to unfold the Bolshevik struggle for improvement of labor organization and strengthen discipline!” The material standing and living conditions of workers were practically overlooked. At the same time, the real wages of those occupied in production and industrial manufacturing decreased from 50 to 30% over the five-year-plan period; all social programs had failed.⁴⁵

Readers of the newspapers Pravda and Izvestiya could draw little about the results of the five-year-plan. The Plenum was only mentioned by the reports of Stalin and Molotov in the publications of Janua-ry 8–12! Understatement had become an essential component of the information environment of Soviet life. Thus, there was no place for rendering a brief oral presentation made by Vice-Chairman of Gosplan G.I. Lomov on January 8, which contained criticism just in one section, “A number of mines considered by us operational, as a matter of fact, manage as little as 20–60% of their planned capacity, and almost none of the large operational mines in Donbass and Kuzbass provides an output anywhere near that projected.”⁴⁶ On January 21, the newspaper published Lomov’s article, which was largely an encomium to advancement in the fuel industry with minor insertions of abstract remarks.⁴⁷ But even this triggered Stalin’s rage. The Vice-Chairman was immediately discharged from work in Gosplan and subsequently dismissed from the TsK in February 1934.

A speech by People’s Commissar of the Light Industry I.E. Lyubimov (January 10) was omitted in the press due to the phrase, “For example, in America, where the footwear production is 4.5 times greater compared to us, the use of natural sole leather raw material is only 1.5 times greater than in our country.”⁴⁸ Fair to say, the speaker continued to occupy the post until 1937.

Kuibyshev’s report “The Results of Technical Reconstruction in the National Economy” appeared in Pravda on January 13 after closure of the Plenum. It conveyed an optimistic tone and contained declarations on creation of the modern machine building industry, top ranked in the world by the ratio of electrical steel to steel, and completion of technical reconstruction in the oil industry. But a careful reader would have brought to notice that technical reconstruction had been accomplished only in a single (oil) industry. Erection of giant plants either had not been completed or the development of their production capacities was at the initial stage. Electrical steel production seriously failed to keep pace with the indicators of the United States and Germany.⁴⁹ The Chairman of VSNKh did not dare give an answer to the question “To what degree are the five-year-plan targets on technical reconstruction in the national economy met?” But in principle, this was no longer necessary, since on January 13 Pravda published the Plenum resolution based on reports by Stalin, Molotov, and Kuibyshev adopted on January 10. A tradition of Party forums without public debates, but with unanimous approval of preformulated resolutions was becoming firmly embedded in the reality.

The slightly different tone of Ordzhonikidze’s address led to the fact that his speech appeared in the newspaper as late as on January 22. The phrase “we unlearned the ability to count money” could have exemplified a mild criticism of the economic policy. It, however, sounded like an extension of rather strong remarks by the speaker at the 17th Conference on January 30, 1932, with respect to khozraschet fading to oblivion. The statement, “in recent years, we almost entirely lost khozraschet”⁵⁰ implied that a representative of the highest-ranking officials whose contribution to the plan realization was the largest did admit that multitude decisions and decrees on khozraschet introduction had yielded no results. Even rather restricted self-management of producers fell beyond the limits of the command and administration system. As noted by Davies, who was allowed access to the text of the still confidential (an abridged version was published) Plenum stenographic report, precisely one year after this speech, Ordzhonikidze said that the economic executives disregarded issues of production cost as a characteristic feature of industrialization.⁵¹

As if carbon-copied, the speeches of Bukharin, Rykov, and Tomskii published on January 14–16 allowed only one conclusion, “No alternative policy exists.” Three Politburo members in the not so distant past criticized in unison the already nameless “Right-wing opportunists” and praised Stalin. Bukharin’s attempt to distinguish between “socialist” and capitalist industrialization elicited nothing but a smile by the abstractness of reasoning regarding “technologies different in principle,” “capacities different in principle,” etc. But the most important in the speech was another point, that is, the permissibility of severe punishment of the opposition (Smirnov’s group).⁵² Display of unconditional allegiance to the general line attested that the route of departure from principles did not have roadblocks and turned a politician into puppet.

An address made by Rudzutak finalized the work of the Plenum. This representative of the older generation of Bolsheviks declared the onset of a “Party-wide purge.” The intent was apparent, in that the Plenum proclaimed a triumphal completion of the five-year-plan based on Stalin’s report. The purge targeted those who doubted the correctness of the conclusions and evaluations.

The Plenum under consideration occupies a prominent position in the line of the Party forums on the following grounds.

(1) The critical importance of conclusions that went down in the books, e.g., the thesis on “building of the foundations of the socialist economy.”

(2) The scale of deception in society: millions killed by famine, exile and ruination of the most skilled peasants, impoverishment of the population, and the disaster in animal husbandry, and the economic chaos in construction, as well as production and industrial manufacturing, were postulated as the revolutionary victory of “socialistic relations.”

(3) The level of confidentiality: addresses at the Plenum were either not published or intentionally distorted.

There is the other side of the events in Janua-ry 1933. By that time, Stalin had to admit the fallacy of the economic policy of 1929–1931, but was shifting the blame for its tragic outcome to the local officials, resistance and sabotage by “class enemies,” and geopolitical factors. But this overdue avowal paid for dearly by huge material and human losses was of a temporary nature. The mini-reform policy (commodity–monetary relation, wage incentive system, “quasi-market” for labor, and authorizing market trade)⁵³ was fraught with the potential of losing power in the Party, society, and the nation for Stalin and his group. The mythological realm of “undiluted” socialism could have been disturbed even provided sustainment of the command-administration system, in that the policy would have annihilated the entire system of dogmatic arguments for noxiousness of the market, commodity–monetary relations, and economic self-management of producers. It is apparent, however, from the addresses of Lomov, Lyubimov, and Ordzhonikidze that those in charge of industries were unwilling to accept propaganda theses as true. No all-out propaganda of “triumph” could obliterate in the economic executives and regional officials the awareness of the inconsistency between the reality and propaganda, but on the contrary, ingenerated a kind of immunity to the mythologems.⁵⁴ The Plenum participants responsible for specific projects realized that transfer to more moderate policy implied admission of failure of the “great leap.” But it was just a tactical setback for the majority.

At the same time, the emergence of opposition groups among the Party managers indicated a growing discontent with Stalin.⁵⁵ His policy now puzzled above all the directors’ corps in the throes of unrealistic demands, on the one hand, and the passive resistance of the subordinates, on the other.⁵⁶ This became evident as early as at the First All-Union Conference of the Socialist Industry Workers in 1931, while the 17th Party Conference (1932) showed that these attitudes had further infiltrated the Party activists. The January 1933 Plenum of the TsK and Central Control Commission (TsKK) of VKP(b) only confirmed the trend.

The General Secretary retaliated by a political maneuver, i.e., yet another Party-wide purge.⁵⁷ It was launched as a campaign in summer 1929 and subsequently became a “permanent” (in the epoch terms) feature and was controlled by the TsK Departments and the subordinate structures. The purge shaped the government structures and workers’ collectives to fit the extreme, mobilization, and noneconomic goals of Stalin’s ruling⁵⁸ and morphed into a means for expulsion of dissenters (“other-minded”) from the Party. It made a significant contribution to the establishment of thet mythological expanse of the totalitarian state that could only be propelled through coercive administrative measures. The large-scale use of purge and relegation for a hint of criticism, and filling the realm with mythologems, however, failed to stop the growing discontent. The administrative corps responded by voting at the 17th Party Congress to elect candidate members to the TsK on February 9, 1934. The number of delegates who spoke against Stalin ranged from 123 to 300 (the destruction of 166 bulletins is an established fact⁵⁹). A particular part of the advocates for the industrial project was unwilling to put up with Stalin’s mythology.

Coverage of the results of the five-year-plan in the economic press of the USSR was off the well-trodden path. Nearly all articles in Voprosy Ekonomiki journal issues in the first half of 1933 were devoted to the 50th death anniversary of Marx. The editorial in issue no. 2 “Lenin’s Cooperative Plan in Action” proclaimed the triumph of Marxist–Leninist ideas in rural areas.⁶⁰ At the same time, the journal published a lengthy article concerning the predictable “decay of machinery” under capitalism and “displacement of skilled labor by the unskilled.” ⁶¹ A publication in the journal Planovoe Khozyaistvo proved to be the closest to the truth. Thus, in the beginning, an article by G. Knyz’kov “Capital Construction in Heavy Industry during the First Five-Year-Plan” was along the official propaganda lines, “The Results of the First Five-Year-Plan fully justify and compensate for efforts undertaken by the country. Tasks … in heavy industry have been dramatically overfulfilled in four years and three months.” The reported statistical data, however, suggested something very different. The plan for commissioning of new capacities fulfilled by 58.5% (figures converted by the author: 21.3 million rubles planned; actual 11.2 billion rubles generates a different result of 52.6%). This translated into an incomplete construction volume of  8 billion rubles as of January 1, 1933.⁶² The data implicitly threw doubts on the stated “dramatic overfulfillment” of the plan. Stalin’s mythological constructs glaringly disagreed with the reality; statistics often left propaganda “in the lurch.”

The year of 1934 appeared not to have brought any changes. From issue to issue, economic journals commented on the rhetoric of Stalin and his confederates from the Politburo supplemented with parading reports on industrial achievements. Unsubstantiated claims were introduced into a “scholarly” discourse on the “preeminence of Soviet machine building over the American” based on a number of the technical indicators and “tremendous success in mechanization of production processes,” which was, however, accompanied by reports on a high-level of manual labor in “certain select” machine-building branches.⁶³ An article “More on Analysis of Qualitative Indicators in the National Economy of the Soviet Union” was interspersed with slogans, welcoming an “increase in labor productivity in the industrial sector over the first five-year-plan by 41%, cost reduction in machine building over the first five-year-plan by 30%, along with improvement of labor productivity by 64% and increase in wages of workers by 53.8%.”⁶⁴ More dissonant statements would have been hard to find, but the ideological dictate had already picked up steam.

The “mini-reform” process required at least some scientific judgment, nevertheless. An article written by V. Granovskii and G. Nevol’skii appeared to have broached the theoretical “swamp” of the early 1930s. The authors pointed out that “coverage by technically sound norms accounts for a maximum of 30–35% in machine building, 25–30% in the bituminous coal industry, and as low as 15–20% in metallurgy and the chemical industry.” Proclamations with respect to “significant growth of labor productivity” were disavowed by a firm conclusion, “The existing level of planning for labor productivity indicators is utterly inconsistent with their value.” The authors emphasized to refine their thought, “Until now, our enterprises are essentially missing a single system of feasibility assessments of planned calculations on labor, despite instructions of the 17th Party Conference and directive of the People’s Commissariat of Heavy Industry and the All-Union Central Council of Trade Unions to take standard times per unit of production as a basis for all conversions with regard to labor productivity and the work force.”⁶⁵

In his article, V.I. Mezhlauk, who was appointed as a Vice-Chairman of SNKh and head of Gosplan after the 17th Congress, offered critical evaluation of the state of the “Soviet planning” veiled with pointing at the “events of the past,” that is, the period of the first five-year-plan, “We failed to develop growth equilibrium of the national economy.” Furthermore, “Insufficient attention was paid to planning the technical progress, problems of mastering the machinery, faster changeover from planning separate technical indicators to designing a single technical plan for the national economy development.” He also pointed out “the limited use of the important levers of our economy, such as, money, credit, and khozraschet.”⁶⁶

Repressions began to bear on the quality of writings in economic journals as early as in spring 1929, which was a time of defeat of the rationally thinking group of Party leaders. The Soviet economic science slackened further as, in the late 1920s, many journals, including those similar to Planovoe Khozyaistvo in terms of content and collective of the authors (such as Ekonomicheskoe Obozrenie and Ekonomicheskii Byulleten’ published by the Institute of Conjuncture), no longer came out.⁶⁷ The science trapped in Marxist dogmas, however, managed to “push through,” overturning the glad-handing propaganda constructs.

The materials of the January (1933) Plenum and analysis of publications in the press and journals on the economy demonstrate that the Soviet leaders had to recognize the malignancy of the “breakneck pace” policy. The comprehension was impeded by the mythological realm, which included ideological constructs, such as “building the foundations of socialist economy” and “fulfillment of the tasks of the first five-year-plan in four years and three months,” as well as pitiless punishment for a minor critical remark. It should be, however, acknowledged that life proved the authors of the five-year-plan Gosplan variant to be right. The de facto recognition was articulated by its major critics. In February 1932, Molotov associated the first five-year-plan accomplishments with its “optimal variant”; Stalin referred to its figures in Janua-ry 1933. “Rykov’s variant” continued to resurface over and over again to prove its feasibility and viability.

The principles of the first five-year-plan and its instruments were continued in the second five-year-plan, excluding the right of a multi-structured economy to exist. The legal ban on market relations, however, brought nothing except that it succeeded in facilitating the establishment of informal relationships between enterprises. The relationships involved unscheduled and even illegal exchanges and agreements, while alleviating pressure of the government control and stringent economic planning. “Goods exchange” operations, such as unplanned sales and, more commonly, exchange of products between enterprises is an example of the standing mechanisms for adjustment of ineffective bureaucratic distribution of resources. Data of a check carried out by the People’s Commissariat of the Workers’ and Peasants’ Inspection at the beginning of 1932 additionally found that a “huge amount of finished products flows to supply the private market through channels not scheduled for by plans and agreements.”⁶⁸ At the same time, the People’s Commissariats protected the economic executives that could meet the ever-changing targets of plans by any means necessary. The first five-year-plan saw the command and shadow economy interlock, whereas a task to preserve even the semblance of the system of centralized control allowed for the behavior, which was, essentially, against it.⁶⁹ It was discovered that the command economy could not exist without the market, even an extremely distorted one. The latter ensured its survival by compensating for the goods deficit and redistributing the commodity resources.⁷⁰ Involuntary comprehension of the reality forced the Soviet leadership to put their trust more in rational management practices than in repressive measures.