Appendix to chapter 2: A Price deflators

Summary

Soviet prices were determined partly by the pressure of administrative determination of prices for officially rationed goods, partly by supply and demand in unregulated markets. In wartime the different markets displayed sharply divergent trends. Official prices of industrial and consumer goods and transport services rose (in some cases quite substantially), but the increases were strictly controlled. Weapon prices fell. In unofficial markets for consumer goods, upon which fell the entire burden of frustrated household demand for goods and services in short supply at official prices, the price level became hugely inflated.

Although wartime trends in official prices were closely regulated, and did not reflect market supply and demand, they were not arbitrary. Soviet price controllers continued to follow the cost-plus methodology established in peacetime, and went on trying to get official prices right, at least in terms of their own methodology.

Of the documents which express this striving, none is more evocative than correspondence of 1944 between Narkomugol (the commissariat of the coal industry), Gosplan, and NKVD. The deputy head of finance of Narkomugol explained that early in 1943 the NKVD had contracted to supply the coal industry with forced labourers, each at 35 per cent of the going wage rate. But in March the government had effectively doubled the official wage rate for miners; this had triggered a corresponding increase in payments for subcontracted NKVD labourers, further raising the average cost of mined coal.