SOVIET STEEL EXPANSION NO EGALITARIANISM IN RUSSIAN INDUSTRY
[By
"LYNCEUS”
of the “Economist”)
[From the “Economist” Intelligence Unit}
London. April 23.—1 t is not often that a Russian industry is unveiled. diagnosed, and held up for inspection to the wide world. Least of all would one expect this treatment to be given to the most basic industry of all, namely steel. The miracle, however, has happened. It happened during the fleeting opportunity for more open and friendly relations between the Communist and nonCommunist worlds that was offered in the brief interlude between the debunking of the Stalin myth and the turmoil in Poland and Hungary which caused another about-turn in Soviet policy. During this period a number of industrial delegations from the West visited Russia. One of them, representing the British Iron and Steel Federation, was fortunate enough to be invited to the hitherto secret and severely isolated region just east of the Ural mountains. This is where the latest of Russia’s steel plants are to be found and it is the region on which most of the hopes for the further expansion of the Russian steel industry are pinned. This mission has now made its reports, one of them a confidential and highly technical report on iron and steel-making in the U.S.S.R., which was delivered to the British Iron and Steel Federation- The other is a series of three articles which have recently appeared in the quarterly review of the federation. Impressive Growth
The broad picture they reveal, set in relation to the steel production of the rest of the world, is impressive but by no means disquieting. Just before the war the U.S.S.R. was producing 17,500,000 tons of steel a year. That figure has been raised to 49,000.000 tons for 1956, and on present plans the estimated capacity in 1960 will be just over 68,000,000 tons.
This represents a tremendous rate of expansion, though it has very nearly been matched by the United States, which has raised its output from 48.000.000 tons just before the war, to 106.000,000 tons, and which plans to increase that output further to 134,500,000 tons by 1960. Taking the production figures for 1956 the Communist bloc of U.S.S.R., Eastern. Europe, and China, produced just over 68,000.000 tons of steel. This production was exceeded by that of Western Europe, alone, which reached 85.000.000 tons. If to this figure is added another 110,000.000 tons for North America, it will be seen that in terms of absolute steel production the free world still holds an unquestioned supremacy over the Communist bloc.
Within this picture, too, two points are worth emphasising The first is that the main increase in the Russian productior has taken place in plants well west of the Urals, some of which were built with the help of American engineers during the war. The second is that these relative totals of output should be supplemented by soms indication of the manner in which the steel has in fact been used. As far as the U.S.S.R. is concerned, the bulk of the steel—some 85 to 90 per cent. —is still going into capital goods, whereas in Western Europe and North America about half of the steel produced is allocated to consumer goods. Still a Gap
This distribution of the available steel brings with it the promise of a more rapid and cumulative expansion of production in the Communist bloc than is likely to occur in the free world. On that score, however, it can be added that there is still an enormous gap to be covered before production in the Communist bloc nears that in the free world. Moreover, recent events in Russia and the satellite countries suggest that the demands of the consumers cannot be ignored and postponed indefinitely. The success achieved by Russia in raising its steel output is partly due to the availability of high-quality raw materials and partly to the incentives used to stimulate production. It is also due to the fact that in a centrally planned economy, such as the Russian, development can take place without concern for the demand that will absorb what is produced. Each factory is told precisely how much and what to produce. Those engaged in research and development are aware of the lines along which their work must proceed, and also know that no expense will be spared to enable them to help their particular works in meeting their targets.
This directness and simplicity have a natural fascination for the industrialist and there is evidence in the reports of the British experts that they, too, felt the attraction of a system in which the manufacturer does not have to trouble himself about the future trend of demand. The answer to this is that in a centrally planned system of this kind the waste occurs at other points of the economy. One would like to know, for example, how much steel and other resources are wasted in centrally planned economies because the plan has not provided the right components for every machine at the right place and time. Power of the Director
There can; however, be no question or doubt about the success with which productivity is stimulated in the Russian steel industry. The works director in the plants visited by the British team wielded great power, not only because of the size of his plant but because he was also responsible for running the whole town that had grown round the plant.
At Magnitogorsk, for instance, where the present annual production of steel is well over 6,000,000 tons, ore more than twice as high as in the largest British plant, that of the Steel Company of Wales, the works director also controls a township of about 300,000 inhabitants. The works director and his deputies are highly paid and, after taxation, their net remuneration is considerably higher than that of a general manager of a British plant or of his chief assistants. This is quite apart from the amenities, including country houses and servants, that are available in Russia.
But the British experts noted that, though these industrial leaders were autocrats, their clothes and ruggedness of features helped them to retain the appearance of
working men rather than managers of large plants. They had all come right up from the shop floor. The affinity of the bosses to the working men was found to be a constant help in building up loyalty and morale in these large organisations. For the general run-of-the-mill worker the possibility of becoming one of the bosses may be remote, but there is a strong incentive built into the wage system to increase his production and maximise his efficiency. Everybody, from the works director down, receives a considerable proportion of his total wage in the form of incentive bonuses, which more often than not account for 40 to 50 per cent, of the total wage. Fiscal Incentives Each department or unit, has a planned production figure. Until the man or the team attains this "norm” only a low minimum wage is paid, but once the norm is exceeded a bonus is paid at a rate which rises progressively with the excess over the norm. And since income tax is levied at the low and even rate of 13 per cent, however high the salary, there is no fiscal disincentive to higher earnings.
In addition to these production bonuses, there are in the wage structure of Soviet industry far wider differentials than exist in comparable British or American works. In Russia the labourers may earn as little as 600 roubles a month, while the melters or roller men can readily earn up to 4000 roubles—another reminder from the shrine of Communism that “all men are equal, but some are more equal than others.”
It would also be well to emphasise the place of exhortation and patriotism in the incentives to work that operate in Russian industry. The lesson driven home from early youth by every device of propaganda is that hard work and the achievement of production plans are sacred to every patriotic Russian. There is no exactly comparable spur to industrial emotion in the capitalist organisation of society.
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Press, Volume XCV, Issue 28265, 1 May 1957, Page 12
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1,356SOVIET STEEL EXPANSION NO EGALITARIANISM IN RUSSIAN INDUSTRY Press, Volume XCV, Issue 28265, 1 May 1957, Page 12
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