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Creating Soviet Industry: The House That Stalin Built

Published online by Cambridge University Press:  27 January 2017

Paul R. Gregory  and
Andrei Markevich
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Abstract

This article uses the Soviet state and party archives to describe the workings of a key Soviet economic institution and is designed to serve as a bridge between historical and economic research in the archives. Drawing on the archival records concerning the People’s Commissariats for Heavy and Light Industry, Paul R. Gregory and Andrei Markevich examine how these commissariats interacted with both superiors and subordinates. The principal/agent conflict between vertical orders and "economic rents" from unsanctioned horizontal dealings provide the theoretical framework. Gregory and Markevich explore such disfunctionalities as the tendency to conceal information, to act opportunistically, and to build autarkies as well as the primary measure used to combat these tendencies: splitting the commissariat up.

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Articles
Information
Slavic Review , Volume 61 , Issue 4 , Winter 2002 , pp. 787 - 814
Copyright
Copyright © Association for Slavic, East European, and Eurasian Studies. 2002

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References

Support for the research in this article was provided by the Hoover Institution and by the National Science Foundation. We wish to thank the editor, as well as two anonymous reviewers, for their comments.

1 Berliner, Joseph, “The Contribution of the Soviet Archives,” in Gregory, Paul R., ed., Behind the Fafade of Stalin’s Command Economy (Stanford, 2001), 1–10.Google Scholar

2 For a discussion of this embarrassment of riches, see Getty, J. Arch and Naumov, Oleg, The Road to Terror: Stalin and the Self-Destruction of the Bolsheviks, 1932–1939 (New Haven, 1999), preface.Google Scholar

3 The economic history-Soviet archives working group maintains its PERSA website, in conjunction with Mark Harrison of Warwick University: http://www.Soviet-archivesresearch.co.uk (last consulted 22 August 2002).

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9 Bergson, Abram, The Economics of Soviet Planning (New Haven, 1964), chap. 6.Google Scholar

10 Zaleski, Eugene, Stalinist Planning for Economic Growth, 1933-1952 (Chapel Hill, 1980).CrossRefGoogle Scholar

11 These commissariats have been discussed in die theoredcal and applied literatures: Gregory, Paul R., Restructuring the Soviet Economic Bureaucracy (Cambridge, Mass., 1990);CrossRefGoogle Scholar Conyngham, William J., The Modernization of Soviet Industrial Management (Cambridge, Mass., 1982);CrossRefGoogle Scholar Gorlin, Alice C., “The Power of Industrial Ministries,” Soviet Studies 37, no. 3 (1985);CrossRefGoogle Scholar Keren, Michael, “The Ministry, Plan Changes, and die Ratchet Effect in Planning,” Journal of Comparative Economics 6, no. 4 (1982);Google Scholar Rees, E. A., ed., Decision-Making in the Stalinist Command Economy, 1932–37 (New York, 1997).CrossRefGoogle Scholar

12 Glavk (from glavnoe upravlenie) is the acronym used to refer to the branch production units of the commissariat.

13 For a paper covering this latter topic, see Belova, Eugenia and Gregory, Paul, “Dictators, Loyal, and Opportunistic Agents: The Soviet Archives on Creating the Soviet Economic System,” Public Choice 1, no. 2 (July 2002).Google Scholar

14 Sergo Ordzhonikidze guided the Caucasian party organization dirough the civil war. Widi reluctance and over the protests of his fellow Caucasian party comrades, he accepted Stalin’s call to Moscow, where he occupied a number of central party positions, including the chairmanship of die party’s feared Worker-Peasant Inspection. With his appointment to head the super-ministry, the Supreme Council of the National Economy, he became the leading manager of production, in charge of virtually all industrial production. With die breakup of the Supreme Council in 1932, Ordzhonikidze became the head of NKTP, the dominant industrial ministry of the 1930s. Crude, short-tempered, and outspoken, Ordzhonikidze wielded enormous influence. Just as it is difficult to separate the creation of the system from Stalin; so is it difficult to separate the creation of Soviet industry from Ordzhonikidze.

15 Gregory, Restructuring the Soviet Economic Bureaucracy.

16 Olson, Mancur, “The Devolution of Power in Post-Communist Societies,” in Skidelsky, Robert, ed., Russia’s Stormy Path to Reform (London, 1995), 9–42.Google Scholar

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18 Lazarev, Valery and Gregory, Paul, “The Wheels of a Command Economy: Allocating Soviet Vehicles,” Economic History Review 55, no. 2 (May 2002): 324–48.CrossRefGoogle Scholar

19 Rees, ed., Decision-Making in the Stalinist Command Economy, 6–7; Valery Lazarev and Paul Gregory, “Dictators and Cars: A Study in the Political Economy of Totalitarianism“ (paper presented at the University of Houston, March 2002).

20 Decree No. 8 of the Central Executive Committee of Sovnarkom in Gosudarstvennyi arkhiv Rossiiskoi Federatsii (GARF), f. 5446, op. 1, d. 15,1. 13.

21 Charter for NKTP approved by Sovnarkom on 11 November 1937, in Svod zakonov i postanovlenii raboche-krest'ianskogo pravitel’stva (Moscow, 1937), 375.

22 Charter for NKLP approved by Sovnarkom on 21 July 1938, in Svod zakonov i postanovlenii raboche-krest'ianskogo pravitel’stva (Moscow, 1938), 207.

23 Decree No. 640 of Sovnarkom from 11 September 1931, Rossiiskii gosudarstvennyi arkhiv ekonomiki (RGAE), f. 3429, op. 1, d. 146,11. 809–10.

24 RGAE, f. 4086, op. 2, d. 272,1. 6.

25 RGAE, f. 7297, op. 38, d. 104,1. 2.

26 Zaleski, Stalinist Planning for Economic Growth, 551. These figures are for 1937.

27 Eugenia Belova, “Economic Crime and Punishment,” in Gregory, ed., Behind the Facade, 131–58.

28 Belova and Gregory, “Dictators, Loyal and Opportunistic Agents. “

29 “Val” stands for valovaia produktsiia, or “gross production.” It was commonly denominated in ruble terms in the constant rubles of a base year, such as 1926–27 prices.

30 RGAE, f. 7297, op. 28, d. 335,1. 5.

31 RGAE, f. 7297, op. 38, d. 177,1. 10.

32 The transcript reads as follows: Comrade Tab … a special survey diat we conducted yielded interesting results. It contained two questions: 1) Name an approximate date (month, quarter, or year) when you can get by without subsidies [dotatsii]? 2) If you do not receive a subsidy, what kind of profit will you earn? Fill it out and pass it to your neighbor. The first to receive this survey, a Comrade Birman, passed it to his neighbor without filling it out (laughter in the hall). It then went to a Comrade Makarov. I do not know whether he had agreed with Birman before hand, but he did the same—he passed it on without filling it out. I was then required to have a mathematical discussion with Makarov, and I told him: “Keep in mind that zero is also a number and can sometimes scream out.” When the survey got to a Comrade Puchkov, he wrote down that he could manage in two and a half years. The most laconic response was given by Comrade Zolotorev: “1936.” The most complex answer came from Comrade Fishman: “The enterprises of [my] glavk can make do with considerably lower subsidies than planned and will be able to get by without subsidies from the first quarter of 1936. As for the size of the profit, I cannot tell Comrade Sergo or Comrade Piatakov how large it will be.” Tal concluded his report with the remark: “The survey is small but as you see it teaches an interesting lesson. “ Ordzhonikidze: “It is a shame you did not continue it. “ Comrade Tal: “We will continue it. “ Ordzhonikidze: “Now they will not fill it out; they fear we will use it against them and publish the results.” RGAE, f. 7297, op. 38, d. 177,1. 181. Ordzhonikidze’s quick dismissal of this agenda item shows that glavks and enterprises were held responsible for production. Any losses would be automatically covered.

33 RGAE, f. 7297, op. 38, d. 304,1. 22.

34 NKTP Decree No. 24ss (ss = absolutely secret) from 7 February 1932, RGAE, f. 7297, op. 38, d. 5,1.11.

35 RGAE, f. 7297, op. 38, d. 304,1. 81.

36 RGAE, f. 7297, op. 38, d. 10,1. 10.

37 RGAE, f. 4086, op. 2, d. 276,11. 28–29.

38 RGAE, f. 7297, op. 38, d. 5,1. 27.

39 RGAE, f. 7297, op. 1, d. 25,1. 17.

40 Khlevniuk, O. V., Davies, R., Kosheleva, L. P., Ris, E. A., and Rogovaia, L. A., Stalin i Kaganovich: Perepiska, 1931-1936gg. (Moscow, 2001), 114.Google Scholar

41 Rees, ed., Decision-Making in the Stalinist Command Economy.

42 Khlevniuk, O. V., Kvashonkin, A. V., Kosheleva, L. P., and Rogovaia, L. A., Stalinskoe Politbiurov30-egody (Moscow, 1995), 15–16.Google Scholar

43 Khlevniuk, Davies, Kosheleva, Ris, and Rogovaia, Stalin i Kaganovich, 111-19.

44 Ibid., 123.

45 Ibid., 124.

46 Ibid., 127.

47 Gregory, Restructuring the Soviet Economic Bureaucracy, 57–59.

48 Decree No. 330 from 15 April 1934 “For the Purpose of Strengthening One-Man Management in the System of Management of NKLP and the Placing of More Responsibility on the Directors of Institutions,” RGAE, f. 7604, op. 362, d. 1.

49 At one time, Piatakov was considered a potential head of government. Stalin’s hatred of Piatakov may have been associated with his fear of him.

50 RGAE, f. 7297, op. 28, d. 4,1. 22.

51 Khlevniuk, Davies, Kosheleva, Ris, and Rogovaia, Stalin i Kaganovich, 109.

52 RGAE, f. 7297, op. 38, d. 106,1. 12.

53 Ibid., 3.

54 RGAE, f. 7604, op. 1, d. 37,1. 11.

55 NKTP Decree No. 32 from 8January 1934, RGAE, f. 7297, op. 1, d. 25,1.192.

56 RGAE, f. 7297, op. 38, d. 10,1. 4.

57 RGAE, f. 7297, op. 28, d. 334,11. 11–14.

58 Belova, “Economic Crime and Punishment,” 139–40.

59 These matters are discussed in Getty and Naumov, Road to Terror, chaps. 4-5.

60 Gregory, Restructuring the Soviet Economic Bureaucracy, 129.

61 RGAE, f. 7297, op. 28, d. 4,1. 15; d. 5,11. 11–17; d. 6,1. 117.

62 GUMP’s Decree No. 138 from 7July 1933, RGAE, f. 4086, op. 2, d. 275,11. 46–48.

63 Belova, “Economic Crime and Punishment. “

64 RGAE, f. 7297, op. 28, d. 58,1. 5.

65 NKTP Directive No. 12 from 5 January 1934, “About the Rewarding of Technical Workers and Leading Workers in Factory No. 8,” RGAE, f. 7297. op. 1, d. 25,1. 41.

66 NKTP Directive No. 76 from 1935, “About Forbidding Glavks and Trusts to Reward Managerial Personnel of Factories and Trusts without the Approval of the Ministry,“ RGAE, f. 7297, op. 44, d. 9,1. 16.

67 Lih, Lars T., Naumov, Oleg V., and Khlevniuk, Oleg V., eds., Stalin’s Letters to Molotov, 1925–1936 (New Haven, 1995), 168, 217–18.Google Scholar

68 RGAE, f. 7297, op. 38, d. 104,1. 2.

69 Ofitsialnye zadachi Narkomatov i glavkov i real'naia praktika. RGAE, f. 7297, op. 38, d. 252,1. 2.

70 Khlevniuk, O. V., Stalin i Ordzhonikidze: Konflikty v Politbiuro v 30-e gody (Moscow, 1993), 32.Google Scholar

71 Ibid.

72 Paul Gregory, “The Dictator’s Orders,” in Gregory, ed., Behind theFafade, 13-14.

73 RGAE, f. 7297, op. 28, d. 35,11. 2–14. The distribution of the workload can be seen from the distribution of decree-signing. The commissar signed fewer than half of the decrees. First deputy Piatakov signed the most decrees and clearly directed the daily activities of the commissariat. Pavlunovskii and then Rukhimovich signed directives classified as secret and related to defense production. The same division applied to the glavks, where the deputy director or chief engineer could also sign directives. The director of the glavk, however, signed a higher proportion of decrees than the commissar did for the commissariat.

74 RGAE, f. 7297, op. 38, d. 106,1. 1.

75 Decree No. 59 from 16 March 1932, “On the Question of Insuring the Production Program and Capital Construction of Trust Soiuzsevera for 1932,” RGAE, f. 7297, op. 38, d. 5,11. 38–40.

76 RGAE, f. 7297, op. 38, d. 304,1. 81.

77 NKTP issued Decree No. 70 on 14 February 1932, RGAE, f. 7297, op. 1, d. 1,1. 263.

78 Belova and Gregory showed the commissariat’s practice of issuing two plans. To their enterprises, the commissariat handed down plans that exceeded the official state plan. Records reveal that the glavks played exactly the same game with their subordinates. In a collegium meeting of NKLP of 5 March 1933, the commissar made the following complaint: “First of all, we must bring an end to the practice of our glavks issuing to their enterprises and trusts plans in excess of those approved by the commissariat’s collegium. This may have been allowed last year, but if it continues, it will cause an over expenditure of funds and create a difficult financial situation. We must insist that the glavks issue plans that correspond to those approved by the collegium.” RGAE, f. 7604, op. 1, d. 137, 1. 9.

79 Belova and Gregory, “Dictators, Loyal and Opportunistic Agents. “

80 RGAE, f. 7297, op. 38, d. 9,1. 4.

81 Davies, R. W., Crisis and Progress in the Soviet Economy: 1931-1933 (Basingstoke, Eng., 1996), 292–301.CrossRefGoogle Scholar

82 For Ordzhonikidze’s letter to Molotov, see GARF, f. 5446, op. 16a, d. 84,11. 6–8.

83 GARF, f. 5446, op. 16a, d. 84,11. 7, 8, and 6–8.

84 Ibid., 9.

85 Ibid., 3.

86 RGAE, f. 7297, op. 28, d. 334,1. 42.

87 RGAE, f. 4086, op. 2, d. 3567,1. 50.

88 Directive No. 734 from 26 October 1932, RGAE, f. 7297, op. 44, d. 1 (Prikaz 7 NKTPza 1932), 1.310.

89 RGAE, f. 7297, op. 5, d. 2,11. 12–14.

90 RGAE, f. 7297, op. 28, d. 335,1. 32.

91 RGAE, f. 7297, op. 5, d. 2,11. 12–14.

92 RGAE, f. 7297, op. 38, d. 177,11. 15–16.

93 Berliner, Factory and Manager in the USSR; Granick, Management of the Industrial Firm in the USSR.

94 RGAE, f. 7604, op. 1, d. 169,1.4.

95 RGAE, f. 7297, op. 38, d. 10,11. 4,15.

96 Directive No. 96 from 22 February 1932, RGAE, f. 4086, op. 2, d. 276,11. 28–29; RGAE, f. 7297, op. 38, d. 304,1. 81; and NKTP Directive No. 267s from 28 December 1932, RGAE, f. 7297, op. 38, d. 5,1. 310.

97 Belova and Gregory, “Dictators, Loyal, and Opportunistic Agents. “

98 Gregory, Restructuring the Soviet Economic Bureaucracy, 161; E. A. Rees, “Introduction,“ in Rees, ed., Decision-Making in the Stalinist Command Economy, 4.

99 Eugenia Belova, “Conflict Enforcement under Dictatorship: The Case of the Soviet Economy” (Hoover Institution Working Paper, November 2001).

100 Belova and Gregory have described a number of high-level disputes resolved by administrative means, where die disputing parties were an industrial commissariat and Gosplan or die Commissariat of Finance. The procedure was to form a compromise commission, in which each party was represented, to hammer out a resolution acceptable to all parties. In such disputes, die industrial commissariat was frequendy the de facto winner. Belova and Gregory, “Dictators, Loyal, and Opportunistic Agents. “

101 RGAE, f. 7604, op. 1, d. 291,1. 4.

102 GARF, f. 5446, op. 27, d. 92,1. 24.

103 GARF, f. 5446, op. 16a, d. 689,1. 20.

104 Ibid., 1–3.

105 Disputes within a glavk were assigned to the glavk administrator. Such conflicts were to be resolved internally and not passed on to arbitration organs. Dirty linen was not supposed to be washed in public.

106 RGAE, f. 7604, op. 1, d. 453,1. 12.

107 Joint decree of Sovnarkom and die Central Committee, No. 2074 from 14 September 1935, GARF, f. 5446, op. 16, d. 433,11. 6-8.

108 Ibid., 3–5, 4.

109 E. A. Rees and D. H. Watson, “Politburo and Sovnarkom,” in Rees, ed., Decision- Making in the Stalinist Command Economy, 24.

110 GARF, f. 5446, op. 16, d. 99.

111 GARF, f. 5446, op. 15a, d. 66.

112 GARF, f. 5446, op. 16a, d. 20.

113 GARF, f. 7604, op. 1, d. 402, 11. 4, 39 (the appellations of the Commissariat of Light Industry), 11. 11–13 (the appellation of the Sovnarkom of the Ukrainian republic), 11. 24–25 (the appellation of the Commissariat of the Wood Industry), 1. 30 (the appellation of the executive committee of the Leningrad region).

114 GARF, f. 5446, op. 16, d. 68.

115 GARF, f. 5446, op. 16, d. 115.

116 GARF, f. 5446, op. 16, d. 100.

117 Valery Lazarev, “Evolution of the Soviet Elite and Its Post-Communist Transformation“ (paper presented at the conference “Initial Conditions and the Transition Economy in Russia,” University of Houston, Houston, Texas, 19–21 April 2001).

118 Andrei Markevich, Report No. 3, “The Ministry of Heavy Industry in the 1930s,“ University of Houston Working Paper, 2000.

119 Soiuzkino, a powerful, independent organization responsible for Soviet film making and important to the dictator as a source of propaganda, also generated revenue.

120 RGAE, f. 7604, op. 1, d. 129,1.15. Correspondence with the Central Committee, Politburo, and Central Executive Committee of the Russian Republic on the production activities of light industry.

121 Granick, David, Soviet Metal Fabricating and Economic Development (Madison, 1967).Google Scholar

122 RGAE, f. 4086, op. 2, d. 3566,1. 11.

123 Ibid., 9–10.

124 RGAE, f. 7297, op. 38, d. 106,1.1.