Five Year Plan (USSR)

Five-Year Plans for the National Economy of the USSR or Piatiletkas (пятилетка) were a series of nation-wide centralized exercises in rapid economic development in the Soviet Union. The plans were developed by the Gosplan based on the Theory of Productive Forces that was part of the general guidelines of the Communist Party for economic development. Fulfilling the plan became the watchword of Soviet bureaucracy. (See Overview of the Soviet economic planning process)

The same method of planning was also adopted by most other communist states, including India's pro-Soviet government and the People's Republic of China in the 1950-60s. In addition, several capitalist states have emulated the concept of central planning, though in the context of a market economy, by setting integrated economic goals for a finite period of time. Thus we may find "Seven-year Plans" and "Twelve-Year Plans".

Several five-year plans did not take up the full period of time assigned to them (some were successfully completed earlier than expected, while others failed and were abandoned). The initial five-year plans were created to serve in the rapid industrialization of the Soviet Union, and thus placed a major focus on heavy industry. Altogether, there were 13 five-year plans. The first one was accepted in 1928, for the five year period from 1929 to 1933, and completed one year early. The last, thirteenth Five-Year Plan was for the period from 1991 to 1995 and was not completed, as the Soviet Union was dissolved in 1991.

Background

Stalin inherited from Lenin, and retained, the New Economic Policy (NEP). In 1921, Lenin had persuaded the 10th Party Congress to approve the NEP as a replacement for the War Communism that had been set up during the Russian Civil War. In War Communism, the state had assumed control of all the means of production, exchange (trade), and communication. All land had been declared nationalized (by the Decree on Land, finalized in the 1922 Land Code) which also set collectivization as the long-term goal), although the peasants had been allowed to work the land they held, with the production surplus to their needs being bought by the state on the state's terms (not surprisingly, the peasants cut production, whereupon food was "requisitioned", i.e., seized); money gradually came to be replaced by barter and a system of coupons.

Under the NEP, the State controlled all large enterprises (factories, mines, railways), as well as enterprises of medium size, but small private enterprises, employing fewer than 20 people (mostly tradesmen and shopkeepers) were allowed. The requisitioning of farm produce was replaced by a tax system (a fixed proportion of the crop), and the peasants were free to sell their surplus (at a state-regulated price) - although they were encouraged to join state farms (Sovkhozes, set up on land expropriated from nobles after the 1917 revolution), in which they worked for a fixed wage like workers in a factory. Money came back into use, with new bank notes being issued, backed by gold.

The NEP had been Lenin's response to a crisis. In 1920, industrial production had been 13% and agricultural production 20% of the 1913 figures. Between February 21 and March 17 1921, the sailors in Kronstadt had mutinied. In addition, the Russian Civil War, which had been the main reason for the introduction of War Communism, had virtually been won and so controls could be relaxed.

In the 1920s, there was a great debate between Bukharin, Tomsky, and Rykov on the one hand, and Trotsky, Zinoviev and Kamenev on the other. The former group considered that the NEP provided sufficient state control of the economy and sufficiently rapid development, while the latter argued in favour of more rapid development and greater state control, taking the view, among other things, that profits should be shared among all people, and not just among a privileged few. In 1925, at the 14th Party Congress, Stalin, as he usually did in the early days, stayed in the background but sided with the Bukharin group. However, later, in 1927, he changed sides, supporting those in favour of a new course, with greater state control.

The Plans

Each five-year plan dealt with all aspects of development: capital goods (those used to produce other goods, like coal, iron, and machinery), consumer goods (e.g. chairs, carpets, and irons), agriculture, transportation and communications, health, education, and welfare. However, the emphasis varied from plan to plan, although generally the emphasis was on power (electricity), capital goods, and agriculture. There were base and optimum targets. Efforts were made, especially in the Third Plan, to move industry eastward to make it safer from attack during World War II.

The First Plan, 1928-1932

Stalin introduced the first plan in 1928, and its success in achieving its goals was declared ahead of schedule, in 1932. Stalin made his motivation in formulating the plan clear when he stated that Russia was a good fifty or hundred years behind the industrial powers of the time, and that they must industrialize "or.. be crushed."

The Second Plan, 1932-1937

Despite some problems with the first plan, the government went ahead with the Second Five Year Plan in 1932. The Second Five-Year Plan brought a spectacular rise in steel production, more than 17 million tons, placing the Soviet Union not far behind Germany as one of the major steel-producing countries of the world. As was the case with the other five-year plans, the second was not uniformly successful, failing to reach the recommended production levels in such crucial areas as coal, and oil.

The Third Plan, 1938-1942

The first two years of the Third Five-Year Plan proved to be even more of a disappointment in terms of proclaimed production goals. Even so, the value of these goals and of the coordination of an entire economy's development of central planning has been undeniable. For the 12% to 13% rate of annual industrial growth attained in the Soviet Union during the 1930's has few parallels in the economic history of other countries. Since Russia's economy had always lagged behind the rest of Europe, these increases appeared all the more dramatic. Additionally, this high rate of growth was continued after World War II, as much devastation needed to be repaired, and continued into the early fifties, after which it had gradually declined.

The Fourth and Fifth Plans, 1946-1950 and 1951-1955

After the Second World War, the emphasis was on reconstruction, and Stalin in 1945 promised that the USSR would be the leading industrial power by 1960.

Much of the USSR at this stage had been devastated by the war. Officially, 98,000 collective farms had been ransacked and ruined, with the loss of 137,000 tractors, 49,000 combine harvesters, 7 million horses, 17 million cattle, 20 million pigs, 27 million sheep; 25% of all capital equipment had been destroyed in 35,000 plants and factories; 6 million buildings, including 40,000 hospitals, in 70,000 villages and 4,710 towns (40% urban housing) were destroyed, leaving 25 million homeless; about 40% of railway tracks had been destroyed; officially 7.5 million servicemen died, plus 6 million civilians, but perhaps 20 million in all died (cf. 250,000 from the US). In 1945, mining and metallurgy were at 40% of the 1940 levels, electric power was down to 52%, pig-iron 26% and steel 45%; food production was 60% of the 1940 level. After Poland, the USSR had been the hardest hit by the war. Reconstruction was impeded by a chronic labour shortage due to the enormous number of Soviet casualties in the war. Moreover, 1946 was the driest year since 1891, and the harvest was poor.

The USA and USSR were unable to agree on the terms of a US loan to aid reconstruction, and this was a contributing factor in the rapid escalation of the Cold War. However, the USSR did gain reparations from Germany, and made Eastern European countries make payments in return for the Soviets having liberated them from the Nazis. in 1949, the Comecon (Council for Mutual Economic Aid) was set up, linking the Eastern bloc countries economically. One-third of the Fourth Plan's capital expenditure was spent on Ukraine, which was important agriculturally and industrially, and which had been one of the areas most devastated by war.

In 1947, food rationing was ended, but agricultural production was barely above the 1940 level by 1952. However, industrial production in 1952 was nearly double the 1940 level.

The Sixth Plan, 1956-1960

The Seven Year Plan, 1959-1965

The Ninth Plan, 1971-1975

The Tenth Plan, 1976-1981

The Eleventh Plan, 1981-1985

During the Eleventh Five-Year Plan, the country imported some 42 million tons of grain annually, almost twice as much as during the Tenth Five-Year Plan and three times as much as during the Ninth Five-Year Plan (1971-75). The bulk of this grain was sold by the West; in 1985, for example, 94 percent of Soviet grain imports were from the nonsocialist world, with the United States selling 14.1 million tons. However, total Soviet export to the West was always almost as high as import, for example, in 1984 total export to the West was 21.3 billion rubles, while total import was 19.6 billion rubles.

The Twelfth Plan 1986-1990

See also: Perestroika

The last, 12th plan started with the slogan of uskoreniye, the acceleration of economical development (quickly forgotten in favor of a more vague motto perestroika) ended among a profound economical crisis in virtually all areas of Soviet economy and drop in production.

The 1987 Law on State Enterprise and the follow-up decrees about khozraschyot and self-financing in various areas of the Soviet economy were aimed at the decentralization of the planned economy.

Five-year plans outside the USSR

Nepal, despite not having a communist government, has used a series of five-year plans since 1956.
Belarus since the government of Alyaksandr Lukashenka.
The People's Republic of China has also used five-year plans (see Economic history of China).
The Five-year plans of Vietnam
The Five-year plans of South Korea - 1962
The Five-Year Plans of India
The government of Malaysia has implemented five-year plans on a routine basis since 1955, beginning with the First Malayan Five Year Plan.

Economy of the Soviet Union | Soviet phraseology

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