The Military–Strategic Factor in the Economic Policy of the “Khrushchev Decade”

The role of the military–strategic factor in determining the main trends of the economic policy of the “Khrushchev decade” is analyzed. It is noted that the limitation of military spending after Stalin’s death made it possible to reduce disproportions in the country’s economy. As a result, the pace of its development increased and the well-being of the population grew noticeably. Based on the successes achieved, long-term plans were made. They envisaged the acceleration of economic growth and the improvement of the material well-being of the Soviet people. However, the publicized plans proved unworkable. The desire of the Soviet leadership to strengthen radically the position of the Soviet Union in the international arena in the conditions of the Cold War turned into a return to the policy of unlimited buildup of military power and a decrease in investment activity. As a result, instead of acceleration, at the turn of the 1950s–1960s, there were a decline in the rate of economic growth, stagnation, and even a decline in the standard of living of the population.

The Khrushchev decade is one of the most controversial periods in Soviet economic history. On the one hand, the achievements in the development of nuclear energy, the development of rocket and space technology, and the improvement in the standard of living of the population were impressive. On the other hand, this was a time of unfulfilled hopes. Instead of a rapid increase in production in the late 1950s, the rate of economic growth slowed down. Equally unworkable were plans for a steady increase in citizens' incomes. The question arises: Why did these expectations fall short?
Modern historiography gives various answers to this question. Some researchers focus on the mistakes of the country's leadership in economic policy; the incorrect arrangement of its priorities; and adherence to ideological stereotypes, which did not allow for overdue transformations. Others note the inferiority of the very institutions of social management, the fundamental inefficiency and irresponsibility of the "socialist economic system," which "programmed" the attenuation of the pace of economic development as its scale increased. Numerous facts are cited to confirm this view. It seems, however, that the picture will be incomplete if we do not trace the relationship between the growth rates of the Soviet economy and the level of its structural militarization. 1 Note that the study of the main trends and scales of building up military-industrial power in the Khrushchev decade has solid groundwork. 2 However, there is still no clear understanding of the role of the military-strategic factor in the failed acceleration of those years, and how the arms race affected the fulfillment of the ambitious plans. This explains the choice of the topic of this article.
Obviously, the economic strategy and policy of the new leadership of the country meant a certain departure from the Stalinist course. As early as March 1953, at the suggestion of L.P. Beria, the USSR Council of Ministers decided to "terminate or eliminate a number of large construction projects," provided for by "previously adopted government decrees" but not following from "urgent needs of the national economy." Conservation of the construction of individual militarystrategic railways and highways and hydraulic structures made it possible to reduce capital investments by ₽3. 46 billion 3 (about 3% of the volume in all ministries and departments). The following month, another landmark decision was made: a reduction in appropriations for the purchase of conventional weapons by ₽4.6 billion 4 (more than 4% of the official defense budget in 1953). The haste with which these decisions were made testified to the presence of serious disproportions in the socioeconomic development. They were the result of the unrestrained buildup of military-industrial power. This was caused by the country's involvement in the Cold War, the main responsibility for which is often attributed to the expansionist policy of the Soviet Union, its desire for planetary domination. In reality, the strategic goals of the Soviet Union in the first postwar decade lay in a different plane: ensuring the stability of the regime, consolidating zones of influence in Europe and the Far East, and strengthening the status of a great power. 5 However, the former allies in the anti-Hitler coalition perceived them as an existential threat to the Western world. Hence, the "containment policy" was proclaimed by the United States in the late 1940s. Its main task was a "fundamental" change in the nature of the Soviet system, transformation of Soviet society as a necessary condition for the failure of the Soviet "aggressive plans." In other words, the legitimacy of the very existence of the Soviet Union was called into question. This determined the political course of the United States for the next 40 years. 6 Containment policy immediately turned into an increase in confrontation between the two superpowers. The main provisions of the Soviet military doctrine were formulated with account for these circumstances. Researchers do not have access to documents that could make it possible to reconstruct its contents in every detail. Yet it is obvious that Soviet military plans were not limited, as is sometimes claimed, 7 to purely defensive tasks. Adhering to such a strategy meant dooming oneself to defeat at least because of the overwhelming military and economic superiority of the "possible adversary." Therefore, the USSR Armed Forces, in the event of a global war, focused on the encirclement and destruction of rival troops in the 3 "Novyi kurs" L.P. Berii. 1953  course of fleeting offensive operations in the Eurasian theaters of war. 8 Only under this condition could the Soviet Union count on an acceptable end to a possible military conflict with the United States and its allies. The imperatives of the Cold War prompted the Soviet leadership to make serious adjustments to the postwar plans for "the restoration and further development of the national economy." Limiting the cost of maintaining military power was replaced by a policy of advancing the buildup of the defense potential. From 1947 to 1953, the size of the army doubled, to almost 5.4 million people, and a program of equipping it with various types of weapons was implemented "at full tilt." The corresponding dynamics was reflected in the official budget of the military departments. By 1953, it had reached the level of the last year of the Second World War. Allocations for the development of military equipment and the production base of the military-industrial ministries, which took place under the item "development of the national economy," increased even more rapidly. 9 However, an army of many millions, equipped with conventional weapons, no longer provided an adequate defense capability. The emergence of a strike nuclear force in the United States had given it an important advantage. To prevent a catastrophic change in the balance of power, the "atomic project" was launched. In 1949, the Soviet Union tested an experimental nuclear charge. In the year of Stalin's death, there were already 120 "products" in the arsenal. 10 At the same time, a program was being developed for delivering missile means to possible targets.
The appearance of fundamentally new types of weapons, however, did not affect the military doctrine and the development of the Armed Forces. During the years 1945-1953, their "power" still rested on "conventional weapons." 11 There were good reasons for this. The limited number of available nuclear warheads and their relatively small capacity did not allow counting on inflicting any significant damage to the military and economic potential of the "possible enemy." There were also no suitable delivery vehicles that could break through the air defenses of strategic facilities. The expediency of using nuclear weapons in military tactical operations was questionable. It seemed more justified to use the "products" to iso-late the area of combat operations: strikes at reserves, rear depots and supply bases, communication centers, and command and control centers of the enemy. 12 In any case, the appearance of nuclear weapons meant a revolution in military science. The rapid increase in the power of nuclear warheads and the improvement in the tactical and technical characteristics of their carriers promised a significant expansion of the possibilities for solving both strategic and operational-tactical tasks in the near future. Prospects were opened for reducing the size of the Armed Forces and optimizing programs for the production of traditional types of military equipment. However, such options were not even discussed. This was mainly due to the mismatch between military-strategic and military-economic planning. There was practically no coordination of the activities of individual parts of the military-industrial complex. The military command was generally "eliminated" from the development of "issues," which was carried out in two poorly coordinated areas: "saturating the military equipment of traditional military branches and creating nuclear weapons." This put an additional burden on the country's economy.
It is difficult to determine the level of Soviet military spending. Researchers do not have access to materials that allow detailed calculations. Therefore, only rough estimates are possible. According to "informed authors," defense spending in the postwar years (including capital investments of the militaryindustrial ministries, defense R&D expenditures, and maintenance of mobilization reserves) amounted to about 10% of the gross national product. 13 Obviously, the level of militarization of the late Soviet economy changed over time. Yet it remains unclear how the above assessment accounted for the financing of the nuclear weapons complex and the creation of "longrange" missiles, carried out under the hard-to-reconstruct "special expenses" item. Maybe the difficulties in determining their volume, along with differences in calculation methods, explain the higher estimates of the share of defense spending in Soviet GDP (from 12-13 to 15-17%) by foreign analytical centers. In any case, this indicator was 2.5-3 times higher than that in the United States. 14 The buildup of military power was due to cutting spending on all other areas. Of course, in the first postwar years there were undoubted successes in the reconstruction of areas that had suffered during the hostilities. A lot was also done to increase the potential of basic industries. However, even they were systematically underfunded. Despite all the declarations about the need for technical re-equipment of production, positive changes were observed mainly in the defense industry. In essence, the implementation of a number of large economic projects was suspended. However, the arms race had the most negative impact on the population, whose standard of living remained extremely low.
Stalin's successors could not ignore the accumulated problems. Moreover, they were faced with the task of increasing the authority and strengthening the legitimacy of the new government. The easiest way to achieve such a result could be through obviously popular measures to improve the material situation of the "broad masses of working people." Of course, the question immediately arose of where to get the necessary resources. The answer to it was given by Beria's initiatives to revise costly investment projects that promised returns in an indefinite future and to cut military spending. It remained to announce how the released funds would be used. This was done by G.M. Malenkov, who chaired the USSR Council of Ministers. Speaking at the Session of the Supreme Council in August 1953, he declared, "The urgent task is to increase sharply the provision of the population with food and industrial goods within two to three years." For this, Malenkov emphasized, "the government and the Central Committee of the Party" considered it necessary to "increase significantly" the production of "consumer goods," directing additional investments into the development of light and food industries and agriculture; to increase the incomes of low-paid categories of workers; etc. 15 True, later this speech was used against Malenkov himself in the struggle for power and was qualified as a "parliamentary declaration," designed "to gain cheap popularity" by making "economically unfounded promises." 16 Nevertheless, the program outlined on behalf of the "collective leadership" set the guidelines for the implementation of the policy. The budget of the Ministry of Defense turned out to be practically frozen. The reduction in the size of the army began (at first unofficially, but in 1955 such a prospect was officially announced). At the same time, some programs to produce conventional weapons and military equipment were reduced. While in 1950-1952 their purchases doubled, in 1953-1955, they increased only by 15%. 17  the gross national product decreased (according to some estimates) by a quarter-from 12 to 9%. 18 The "urgent" measures produced immediate results. The production of consumer goods grew noticeably, and the incomes of the population increased. According to official statistics of wages paid, in 1953-1955 they increased by 19% for workers and employees and by 35% for collective farmers. The reduction in taxes on personal subsidiary plots played a role in increasing material prosperity. Additional income was actively spent on meeting pent-up demand, which was reflected in the volume of retail trade: in 1953-1955, sales of food products increased 1.4 times, and industrial products, 1.6 times. Much more relatively expensive durable goods were purchased. Over three years, sales of radios increased 2.8 times; cameras, 2.3 times; furniture, 2.0 times; watches, 1.8 times; and bicycles, 1.7 times. This was a real increase since prices in the state and cooperative trade remained practically unchanged, and in the collective farm market they showed a relatively small increase (no more than 10% of the fixed trade turnover). 19 In general, we can say that the promises made on behalf of the "collective leadership" were carried out quite satisfactorily. It is not just the statistics. Changes for the better in everyday life are confirmed by a variety of sources, especially documents of personal origin, memoirs. Suffice it to recall the then popular ditty: "Malenkov governs, pancakes in the ovens." Positive shifts were also noted in macroeconomic dynamics, which is demonstrated by both official statistics and alternative calculations. Perhaps the closest to reality are the estimates of the US CIA made at the end of the "Soviet era." According to them, the annual increase in the gross national product in 1953-1955 was 5.9%. This significantly exceeded the same indicator for the previous two years, 3.5%. High growth rates were maintained until the end of the decade. 20 Additional investment in the production of consumer goods paid off quickly owing to the relatively short lead times. This, among other things, made it possible to 17  reduce significantly the increase in construction in progress, which contributed to improvement of monetary circulation and a reduction of tension in the execution of the state budget. However, a simple reallocation of resources could only have a short-term effect. The containment of military spending also had limits. It is true that, to provide a respite in international affairs, the post-Stalinist leadership decided to reduce the level of confrontation with the United States and its allies. As early as July 1953, a truce was concluded in the Korean War. In April of the following year, the Soviet Union took part in the Geneva Conference on Indochina, which allowed France to reduce the costs associated with withdrawing from the Vietnam War. In May 1955, the former allies in the anti-Hitler coalition signed an agreement on the end of the occupation of Austria and its neutral status (this had previously been linked by the Soviet Union to the solution of the "German question"). Another concession to Western opponents was the elimination of military bases in Porkkala Udd (Finland) and Port Arthur (China).
Perhaps the peak of the "thaw" in relations between the Western and Soviet blocs was the meeting of the leaders of the Soviet Union, the United States, Great Britain, and France in Geneva in July 1955. Many observers even started talking about a certain "spirit of Geneva," which promised to relieve the international situation radically. However, it was an illusion since the opponents failed to agree on any key issue. 21 This could hardly be expected since the United States and its allies were not going to abandon the policy of containment, and the Soviet Union was not going to sacrifice its vital interests. Therefore, the maintenance of military power at the proper level remained relevant. A prerequisite was the achievement of sustainably high rates of economic growth. Then additional resources would appear to solve another important task: to supplement the military-industrial orientation of the Soviet economy with the consumeroriented component and to improve further the living conditions of the population. This is how the strategy of economic development loomed, which is rightly associated with the name of N.S. Khrushchev, First Secretary of the CPSU Central Committee. In final form, it took shape after the approval of his sole leadership in the Party (1957). That strategy assumed, first, a massive buildup of industrial capital investments and a respective abrupt increase of the technical level of all branches of the national economy; second, the optimization of military spending and the use of saved funds for long-term development; and third, "improvement" of the organization and management of the economy. The implementation of the planned goals began with the 21 Fursenko, A.A. and Naftali, T. "sovnarkhoz" reform, the essence of which was to replace the sectoral management bodies of industry and construction with territorial ones. It was declared that this would make it possible to get rid of the "fetters" of extreme "centralization and regulation" as the main obstacle "in the matter of rational economy management" and would remove the problem of accelerating scientific and technological progress. 22 Scientific works note that, in principle, the decentralization of the management of industry turned out to be an overdue task. The elimination of departmental barriers really made it possible to organize more rationally the interaction between enterprises of various industries, science, and production. However, the abolition of the ministries, while maintaining the basic principles of "socialist management," and the liberalization of the regime inevitably led to a weakening of the administrative vertical, hence, the decrease in performance discipline, the rejection of established industrial relations, the difficulties in pursuing an industry-specific technical policy, etc. The country's leadership tried to "correct" the obvious flaws in the territorial management system through the situational creation of ever new central bodies of economic management (the State Economic Council, the USSR Supreme Economic Council, etc.) and sectoral state committees, which were analogues of the previous ministries (though with truncated functions). 23 In essence, two or three years after the reform, signs of economic management recentralization began to emerge. Yet the measures taken were chaotic and only partly lived up to expectations.
A certain exception was the military-industrial complex, which is very sparingly mentioned in the historiography. The ministries related to it were immediately transformed into state committees, which were entrusted with sectoral planning, R&D management, and the introduction of new types of weapons into production. The defense enterprises themselves were transferred to the jurisdiction of the economic councils. It was entrusted with "consideration" of plans for the development, serial production, and equipping of the army with nuclear "products" and means of their delivery. The committee, as well as the Defense Council, was headed by Khrushchev. 24 As a result, issues of defense policy and the development of the military-industrial complex were included in the sphere of its exclusive competence.
The administrative vertical built in this way ensured the centralization of military-strategic and militaryeconomic planning. However, this also contributed to the isolation of the military-industrial complex, maintaining its privileged position in the country's economy. The development of the defense industry was based on the idea that nuclear weapons would play a decisive role in the event of a global war. As a result, the key role was assigned to the strategic missile troops, created in December 1959. The traditional types of troops were subject to reduction. By 1960, the size of the Armed Forces had decreased compared to 1953 by almost 1.8 million people. At the same time, the supply of conventional types of weapons was limited and the budget of the Ministry of Defense (in 1960, it turned out to be even somewhat less than in 1955) was stabilized. It seemed that as a result of limiting military spending, the problem of finding additional funds to stimulate general economic growth was successfully resolved.
Such ideas formed the basis of national economic planning. Already the Seven-Year Plan for 1959-1965 envisaged a huge increase in capital investments. Note that it was planned to carry out an accelerated increase in production capacities with account for the latest scientific and technological achievements. Due to this, they expected to increase labor productivity radically, reduce the material intensity of production, increase capital productivity, etc. In other words, the task was to transfer the Soviet economy to an "intensive path of development." Its implementation was to play an important role in the process of building a communist society. The Seven-Year Plan was viewed as an integral part of the program for creating the material and technical base of communism. To refine it, the leadership launched the preparation of the General Perspective for the Development of the USSR National Economy for 1961-1980, the main task of which was to substantiate the realism of building a communist society. For this purpose, all the planned indicators were "adjusted." Fantastic figures appeared such as a fivefold increase in national income over 20 years, a sixfold increase in industrial production, a 3.5-fold increase in real per capita income, a threefold increase in housing provision, etc. Many representatives of the country's leadership were well aware of the impracticability of such plans, so the General Perspective was not approved as a policy document. However, on the insistence of Khrushchev, its main indicators were included in the new party program adopted by the 22nd Congress of the Soviet Communist Party. 25 The ill-conceived character of this decision became obvious the very next day. The reality turned out to be even worse than the simple failure to fulfill plans. Instead of accelerating at the turn of the 1950s-1960s, there was a slowdown in economic development, which was recorded almost immediately. According to the data of the Institute of Economics of the USSR Academy of Sciences, prepared for the October (1964) Plenum of the CPSU Central Committee, over eight years (from 1956 to 1963) the average annual increase in the social product fell by more than two times. 26 Further studies only confirmed this trend. According to the CIA, the average annual increase in the USSR GNP fell from 5.6% in 1956-1960 to 2% in 1961-1963. 27 True, as far as the first half of the 1960s is concerned, the overall picture did not appear so deplorable. Due to smoothing the consequences of the catastrophic crop failure in 1962, the annual increase in GNP was estimated at 4.9%. However, it was still less than in the previous five-year period. Other calculations show similar dynamics. Thus, according to G.I. Khanin, the average annual increase in national income (GNP minus depreciation and nonproductive services) in 1961-1965 amounted to 4.4% compared to 7.2% for 1951-1960. 28 There are various explanations for the slowdown in economic growth. There is an opinion, rooted in the Soviet historiographical tradition, that it was caused by Khrushchev's "voluntarism" and the "low level … of the competence of the ruling elite." Therefore, the reforms did not fundamentally change anything in the command model of economic development, which had exhausted its potential back in the 1950s and could not ensure sustainable growth. 29 Others believe that the problem consisted in the "fundamental defects" of the economic system, the inability of its institutions to adapt to new realities: "The question was only when and how it would collapse." This predetermined the decline in production efficiency and became the main cause of the "sharp decline" in the pace of development. 30 Yet even if this is true, the root cause was the slowdown at the turn of the 1950s-1960s of the growth of fixed production assets, i.e., investment activitythe main "driving force" of the Soviet economy. According to Khanin's calculations, while in 1951-1960 the average annual growth was 5.4%, in 1961-1965 it dropped to just 4.2%. Such a decrease does not appear catastrophic, especially since, according to his estimates, investments in machine building were on the rise. 31 Hence, he connects the slowdown in production growth rates not so much with a lack of production capacities but with a drop in the efficiency of their use due to a decrease in the quality of economic management. 32 However, the fixed increase in capital investments looked good only "on paper." In reality, it was achieved through investments in the defense industry, primarily in a rather narrow segment associated with the production of nuclear missile weapons and the specifics of their statistical accounting. Thus, the cost of increasing the capacity for the extraction of uranium-containing raw materials, the production of nuclear explosives, etc., belonged to the machinebuilding complex. How much money was allocated to it is now impossible to say. Nevertheless, it is known that in the mid-1950s the nuclear industry (without the "allied" enterprises, formally under the jurisdiction of other ministries) absorbed about 4% of all state investments. 33 Judging by the dynamics of the development of the nuclear weapons complex, during the years of the Seven-Year Plan, this figure turned out to be noticeably surpassed. Indirect confirmation of this is the sixfold increase in the number of warheads in the nuclear arsenal (from 1000 to 6000 units). 34 Such growth required huge investments in the extraction and enrichment of uranium-containing raw materials, the creation of new capacities for the production of "nuclear explosives" (weapon-grade uranium, plutonium, lithium deuteride, tritium), the serial production of the "products," and the material and technical base for their development (all this was under the machine-building complex).
A certain idea of the scale of the costs incurred is given by the construction of the Angarsk electrolysis chemical plant. This is a huge complex of uranium enrichment facilities with an estimated cost of ₽5 billion (in 1952 prices). In reality, by the mid-1960s, significantly more funds were allocated for its construction. According to Khrushchev, who visited the plant at the beginning of its construction, the scale of the work made a "stunning" impression on him. Hence the conclusion of Khrushchev, addressed to the members of the Presidium of the Central Committee: to complete the construction of the Angarsk Combine and build another "one or two similar plants," "it is necessary to mobilize all our forces and our material capabilities." 35 With the enrichment technology used at that time, the Angarsk Combine required a gigantic amount of electricity. Therefore, half of the capacities of the Irkutsk hydroelectric power station were immediately reserved for it, and then, to increase the stability of power supply, combined heat and power plant 10 (CHPP-10) was built, the largest in the region. However, only after the commissioning of the Bratsk hydroelectric power station and an electric transmission line (ETL-500) (the construction of which was specially forced), the combine received a proper base. At the time of launch in 1963, its installed capacity used 4% of the electricity produced in the Soviet Union. 37 By this time, the "firstborn" of separation production, the Ural Electrochemical Plant, already consumed more than 3% of that. 38 If we add the Krasnoyarsk (Zelenogorsk) Electrochemical Plant (its first stage was commissioned in 1962) and the Siberian Chemical Plant (commissioned in the mid-1950s), then uranium enrichment enterprises absorbed at least 10% of the total amount of electricity in the country. Another example is the creation of NII-1011, the second R&D nuclear weapons center (today the All-Russia Scientific Research Institute of Technical Physics (VNIITF), Snezhinsk). It was built in the same years as the Novosibirsk Akademgorodok with its 14 institutes, a university, a pilot plant, and housing for 30000 people. The costs for the construction of facilities of these centers are quite comparable.
An even more impressive picture was observed in the development of the rocket and space industry. In fact, during the years of the Seven-Year Plan, the creation of its main enterprises and organizations was completed. This required huge investments, which, apparently, were equal to the amount of funds allocated to the nuclear industry. As a result, at the beginning of 1965, 65 research institutes and experimental design organizations were already engaged in the development of technology, employing over 100000 people. The number of personnel of parent enterprises exceeded 350 000 people. They had 4.8 million square meters of production space and used more than 50000 units of metal-cutting equipment alone. 39 Particular attention was paid to expanding the possibilities for building up strategic nuclear forces. Thanks to the commissioning of new design and production facilities, it became possible to establish largescale production of eight stationary-based missile systems of the first and second generations. At the same time, the country began developing and testing thirdgeneration intercontinental ballistic missiles and antimissile defense systems. 40 Such a scale in building up strategic nuclear forces remained unprecedented until the end of the "Soviet era." Since expenditures were not limited and were carried out "regardless of the degree to which other needs of the national economy were met," this led to their explosive growth. According to American analysts, in the first half of the 1960s, the annual increase was 7.6%. 41  subsidies to agriculture, to introduce a one-time increase in retail prices for livestock products by almost a third (1962) and a "creeping" decrease in output rates when calculating wages, etc. Thus, the loser was primarily the population, which, as expected, turned into an increase in social tension. Such was the price for achieving military-strategic parity with the United States (however, it was officially fixed only in 1972 with the signing of documents on the limitation of strategic weapons and missile defense systems). The economic results of the Khrushchev decade were summed up at the meeting of the Presidium and the Plenum of the CPSU Central Committee in October 1964. They turned out to be disappointing. The new leadership "unanimously" stated that "the economy in a number of important areas has sharply worsened its performance," that "for eight years there has been an unprecedented decline in growth rates in the history of its development." Responsibility for this was placed on the discharged leader, whose "incompetence," "arrogance," "intolerance," "haste," "nonpartisan methods of work," etc., had led to "a number of major mistakes" in the implementation of the "general line of the Party" and had become the main cause of the difficulties experienced. 50 In reality, however, the problem lay in the "general line" itself. Its flaws turned into a mismatch between the goals and possi-bilities of economic development, the undisputed dominance of the military-strategic factor, and the unwillingness to "give up principles" when carrying out urgent reforms. Thus, the removal of Khrushchev did not change anything in the long run. After a short stabilization, caused, among other things, by another temporary restriction of military spending, from the beginning of the 1970s the Soviet economy entered a period of increased spending on the military-industrial complex. This again caused a progressive slowdown in economic growth, culminating two decades later in the collapse of the system.

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