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Vladimir Ivlev

The Crisis in Soviet Industry

(May 1943)

From Fourth International, Vol.2 No.4, May 1941, pp.121-124.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Since 1938 Soviet economy has entered into a profound crisis. One of the clearest symptoms of this crisis is the complete absence of statistics of production since that date. The Soviet government abruptly ceased to make public the production of the various branches of industry. Since this situation could become disagreeable to the “friends” of the USSR, the 18th Party Conference, held February 15-21, gave out statistics which the Stalinist agencies reprint in millions of copies, but of course without so much as the most superficial analysis. A large part of the figures are given in rubles and do not permit, as we shall see, any serious year by year comparison because of the increasing inflation. The other figures are deceitfully combined in order to hide the reality in place of revealing it. Thus the reporters announce dozens of percentages without giving a single absolute figure; the forecasts of the plan are mixed with the figures of actual production; the statistics apply according to the various years to quite different groups of the population, etc., etc. It was the task of the reporters to provide enough figures so that the “friends” would have “serious” arguments and to provide a selection of figures in such a way as to render impossible any exact picture of Soviet economy and of its development.

On the basis of the official figures, and without discussing their accuracy for the moment, we have undertaken to reconstitute the dynamics of the development of Soviet production for the last years. We have been able to obtain positive results for four important branches of production (steel, pig iron, coal, oil); some inconclusive indications for a fifth branch (rolled steel). But before explaining our method and its results it is necessary to review briefly the recent past.

From the Second to the Third Five-Year Plan

he second Five-Year plan was completed at the end of 1937. If one attempts to measure its success by the growth of the fundamental branches of industry, without entering into the question of the quality of the goods produced, we can say that the projected figures of the plan were realized from 70 to 80 percent. The Stalinist leadership claimed a success of almost 100 percent, but they can do this only because they replaced the original figures of the plan with much more modest ones during the course of the realization of the plan.

The third Five-Year plan was adopted at the 18th Congress of the Stalinist party in March 1939 (not to be confused with the 18th Conference of February); this means that during more than 15 months there was no plan whatsoever. Stalin announced at this Congress that the third Five-Year plan would take the country from socialism into communism and the third plan was baptized as the “Stalin plan.” However, the delay in announcing the plan was in itself a sign of the serious difficulties. Another symptom was the extremely low coefficient of growth in comparison with that of the second plan. Taken as a whole, the third plan forecast an average yearly increase only half of that of the period from 1932 to 1937. For certain branches the reduction was enormous. Thus the production of steel had increased from 1932 to 1937 by 193 percent. For the third Five-Year period the plan envisaged an increase of 58 percent; that is, one-third to one-fourth less. We shall see how these percentages have been realized!

The Carrying Out of the Third Five-Year Plan

Because of the lack of general statistics, it is impossible to obtain a rounded out picture. Nevertheless, it is possible to obtain a sketch of the development in a few, but very important, branches of industry from 1937 to the present time solely on the basis of the official figures announced at the 18th Conference.


Last February the 18th Conference adopted as its goal for the production of steel in 1941, 22,400,000 metric tons. Voznesensky declared in his report that this figure represented an increase of 22 percent over the production of 1940, which permits us to calculate the latter as 18,360,000 tons (100/122 of the official figure for 1941). But the official figures of production for 1937 were 17,330,000 tons and for 1938, 18,000,000. The plan for 1939 envisaged 18,800,000 tons and no figure-of actual production was published for that year. The official report of the 18th Conference thus demonstrates that production for 1940 was well behind the plan for 1939. It is sufficient to open one’s eyes to the figures, something the servile “friends” of the bureaucracy are careful to avoid doing. As for the figure set as the goal of production for the end of the Five-Year plan in 1942, 27,500,000 tons, it is clearly at an inaccessible height. No one at the Conference, moreover, so much as breathed the figure adopted two years ago at the 18th Congress of the party when the goal was set under the genius-like leadership of Stalin.

The rates of growth speak a very dramatic language. The increase in the production of steel from 1937 to 1940 was 3.55 percent (if we utilize the official figure as the basis of calculation), or an average yearly increase of 1.18 percent during these three years. The Conference, however, decided to set 22 percent as the annual increase for 1941. The delegates voted unanimously for such a fantastic decision solely because of the revolver at their temples.

The plan for the period from 1937 to 1942 set as the goal an average annual increase of 11 percent, very modest in comparison with the preceding five-year period. However from 1937 to 1940 the average yearly increase in the volume of production was 1.18 percent; that is, the plan of growth was carried out by only 10 percent according to the official figures themselves!

Let those who find our figures too somber show us others! Our calculations are confirmed, moreover, by the Soviet newspaper Industrya which declared on November 17, 1938, that the production of steel was far behind schedule and that it had fallen even below the 1938 level.

The steel industry was not singled out for special criticism at the last Conference of the party. Some branches of economy may be in better condition. Many others are worse. Steel, however, is an essential raw material in the economy. The production of steel at the present time thus represents an average barometer of the whole industry. The conclusion is inescapable: since 1938-39 the Soviet economy has entered a profound crisis. The reality is completely out of accord with the figures unanimously adopted at the inauguration of the “Stalin plan” of 1939.

Pig Iron

For 1941 the 18th Conference set 18,000,000 tons as the goal for pig iron production, asserting that this would constitute an increase of 21 percent over the preceding year; that is, that the production of 1940 computed on the basis of the official figures amounted to 14,876,000 tons. The production of 1937 was 14,487,000 tons, that of 1938, 14,600,000; the 1939 goal was set at 15,600,000 tons. As in the case of steel, the production of pig iron in 1940 was well behind the plan set for 1939. The Five-Year plan envisaged an average annual increase of 10.23 percent. From 1937 to 1940 the increase was 2.70 percent, or an average increase of 0.90 percent per year, that is, an increase of scarcely one-twelfth the one set by the plan. Here also no correlation exists any longer between the plan and the reality.

In March 1939 Stalin declared: “We may consider quite feasible an average annual increase in the output of pig iron of two or two and a half million tons, bearing in mind the present state of the technique of iron smelting.” (From Socialism to Communism, Joseph Stalin, International Publishers, 1939.) The average yearly increase between 1937 and 1940 as derived from the official figure was in reality 130,000 tons, that is, one-fifteenth to one-eighteenth of the figure proclaimed by Stalin. Woe to the delegate who at the last Conference might have dared to recall the figure given out by the “master-planner” two years previously!


The 18th Party Conference set the production of coal at 191,000,000 tons for 1941, and the reporter declared that this was an increase of 16 percent over 1940. The production in 1940, if we again compute from the official figure, was consequently 164,655,000 tons. In 1937 it had been 127,900,000 tons. During the first three years of the plan (from the end of 1937 to the end of 1940) the production thus increased yearly by an average of 9.58 percent. The plan forecast 18 percent. The actual gain according to the official figure was thus half the goal set in the plan. This figure, somewhat greater than for the production of steel and pig iron, is explained by the tremendous capital investments in the coal industry.

From 1937 to 1940 new mines were opened with a capacity output of 40 percent of the total production in 1937, whereas the capital investments in the other fundamental branches of industry were considerably smaller. But if tremendous expenditures in new mines have been able to increase the official production up to half of the planned increase, the conditions in the coal industry have not changed very much. On April 4, 1940, the People’s Commissariat for the Coal Industry declared that one of the principal coal fields, the Don Basin, had swallowed up great sums of money for technical improvements, but that its production during the last three years increased scarcely 3 percent!


The 18th Conference fixed 38,000,000 tons for the production of oil and derivative products in 1941. The planned increase for the year 1940-41 was set at 11 percent. That means that the 1940 output if we again accept the official figure was 34,234,000 tons. The production in 1937 was 30,500,000 tons. No figures are available between 1937 and 1940. So the actual average yearly increase between 1937 and 1940 was 4.08 percent, while the plan forecast a yearly increase of 15.41 percent, or almost quadruple. As for the planned production for 1942 adopted in 1939, 54,000,000 tons, that has been left hanging in the clouds. And there was complete silence about it at the last Conference.

Rolled Steel

The production of rolled steel in 1937 was 13,000,000 tons. The 18th Conference fixed 15,800,000 tons as the goal for 1941. But here we run up against one of the stratagems used by the bureaucracy to hide the reality. The rate of growth for the year 1941 was announced at the Conference as 23 percent for “high-grade” rolled steel, while the output announced was for rolled steel in general. Hence it is impossible to make any conclusions about the actual production! Nevertheless, if we apply this rate of 23 percent to the general output of 1941, we obtain an actual official production of 12,846,000 tons for 1940. In 1937 the output was 13,000,000 tons. So the output would have decreased yearly from 1937 to 1941 by 0.39 percent instead of increasing 12.31 percent a year according to the plan. We must admit that the ruse of the bureaucracy leaves this assumption inconclusive. However, the very fact that the leadership laid down a smoke screen over this branch of industry is an infallible indication that the situation is far from brilliant.

Steel, pig iron, coal, oil, and rolled steel, these are all the branches of industry in which we can draw conclusions. The other figures given at the last 18th Conference have so little relationship one with another; the bureaucracy knows so well how to cover up the reality, that it is impossible to follow the development from year to year.

In his report at the 18th Conference, Voznesensky compared a few figures of the daily output at the end of 1940 with those at the end of 1937. He concluded from these figures the “possibility not only of fulfilling but of over-fulfilling the 1941 plan.”

An examination of the figures shows that the rate of growth thus calculated is far behind those forecast in the Five-Year plan. In fact they are not much more than a third. Thus according to Voznesensky the daily output of oil at the end of 1937, between 84 and 86 thousand tons, reached 97 to 98 thousand tons at the end of 1940 which gives an average yearly rate of growth of 5.1 percent, while the plan forecast 15.41 percent. The rates thus calculated are however somewhat greater (except for coal) than those we have obtained by the comparison of the total yearly outputs. How explain this? The key to the enigma is given us by the bureaucracy itself through the pen of Walter Duranty, who last February mentioned the “spurt” in the final quarter of 1940. The figures of daily output presented by Voznesensky are in reality those of a very short period, prepared for the use of the Conference.

The Inflation

We shall not discuss here the question of the quality of production (which has become worse since 1937). Nor shall we discuss the deterioration of the machines which occurs in the “spurts” that take place at each change of director (ami they are frequent) and at the end of each year (to attain the figures of the plan). On the basis of the official figures, prepared for the party Conference, we have tried to show the purely quantitative development of some fundamental branches of industry.

The 18th Conference was told that the output of industry had increased from 95.5 billion rubles in 1937 to 162 billion rubles in 1940; that is an increase of 44 percent or almost 15 percent a year. Not a single one of the fundamental branches of industry have made, by far, such an advance. The sole explanation is that during the last three years the ruble has melted away, prices have increased, the printing press has been working overtime. An analysis of the official budget will lead to the same conclusion. (See the article by John G. Wright in The Militant, March 8, 1941.)

* * *

True to the teachings of “socialism in one country,” Voznesensky opened his report on the economic tasks by declaring that the Soviet economic development is not affected by the “blows of crises and wars.” However, his speech, those of the other reporters, and the very holding of the conference itself were nothing but denials of such an affirmation. Stalin’s silence, more eloquent than his speeches, only underlined the gravity of the crisis that the Soviet union is now undergoing.

The conference did not concern itself over the causes of the crisis. Its task was to cover it up by denouncing the “individual insufficiencies.” The present crisis is the crisis of the whole system of bureaucratic leadership. The nationalized economy is more and more strangled in the bureaucratic noose. Thus to resolve the fundamental problem of the economy, that of the productivity of labor, Stalin has found nothing in his arsenal but ever more brutal violence against the workers. The present war intensifies this fundamental policy, and in two ways: by extremely increasing the needs of Soviet defense and by making much more difficult the buying of tools abroad.

To the catastrophic consequences of his system, so aggravated in the face of the war, Stalin has only one answer: ever-increasing terror. Seven People’s Commissars have been “warned” by the Conference, that is, they work now under the direct muzzle of the revolver. To complete the picture, it is necessary to add that they direct such commissariats as aviation, munitions, electric power, chemicals. The three last representatives of some importance remaining of the old Stalinist crew are on the way out: Litvinov has been “purged,” Molotov and Kaganovitch received “family” warnings. Besides all this, there is a tremendous circulation of completely new faces who appear and disappear. The most extraordinary exemplar of that type is one Merkulov who shone for three weeks like a meteor at the head of the GPU, but was expelled from the Central Committee by the Conference and disappeared. Without doubt his fate has been sealed in the cellars of the Lubianka.

With its expulsions and warnings, the Conference represents Stalin’s lash to pull the economy out of the mud-hole where it has bogged down. The method is not new, the results likewise will not be new. They will be those noted above, but extremely exacerbated. To save the USSR, today economically, tomorrow militarily, the Soviet masses have only one road: to seize the power from the bureaucracy and to restore the democracy of the Soviets.

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