Bureaucracy, Economic

BUREAUCRACY, ECONOMIC

Each of the fifteen union republics had its own state apparatus, which paralleled that of the USSR as a whole. Although there was an elected government (the Supreme Soviet), the USSR Council of Ministers (Sovet Ministrov SSSR ) conducted the business of government and constituted the highest oversight and executive body of the Soviet economic bureaucracy. It was composed of industrial ministers, chairmen of various state committees, and chairmen of agencies with ministerial status. The chairman of the Council occupied the most powerful position in the state apparatus, in effect the position of prime minister. At various stages of Soviet history, the head of the Communist Party of the USSR and the head of the state were the same person, but this was not always the case. The Council of Ministers was responsible for the enactment of the economic policies of the Communist Party by the state bureaucracy. The Council of Ministers was the main source of economic legislation; it coordinated and directed the activities of the state committees and the ministries, and supervised national economic planning, state budget, and credit and currency systems. It was authorized to reverse the decisions of ministries and make and execute the key resource-allocation decisions of the Soviet economy.

State economic committees were subordinated to the Council of Ministries of the USSR in the vast Soviet economic bureaucracy. Gosplan SSSR (the state planning committee) was the most important such agency, followed by more than forty state committees and agencies with ministerial status involved in economic affairs. Gosplan was subdivided into industrial departments, such as coal, ferrous metals, and machinery, and also had summary departments, such as finance, dealing with functions that crossed functional bodies. Gosplan was primarily responsible for executing the directives of the Council of Ministries and preparing annual operational plans for the industrial ministries with the participation of the latter. In addition, Gosplan was charged with the preparation of long-term (five-year) plans and longer-term perspective plans, which had more operational significance for investment planning. Gosplan had considerable responsibilities concerning supply planning and distribution of production (supplies) among ministries; it also arbitrated disputes among ministries or state committees and dealt with the problem of regional coordination.

Other state economic committees can be divided into three groups: Gossnab SSSR (the State Committee for Material Technical Supply), the financial state committees, and other functional state committees. Gossnab SSSR assisted Gosplan with the allocation of key material inputs (funded goods) to the ministries. The reforms of Prime Minister Alexei Kosygin of 1965 assumed, among other things, the assignment to Gossnab of the responsibility for the allocation of producer goods. The ministerial supply organizations that had dominated the rationing of funded goods largely disappeared. The tasks of Gossnab included honing the operational details for detailed assortments of funded goods according to the general allocations outlined by Gosplan. Gossnab acted as an executive arm of Gosplan in matters of supply planning by maintaining actual warehouses and distribution points from which ministries drew materials. Gossnab applied itself to the creation of a wholesale trade system based on direct contracts between suppliers and users. By the late 1970s Gossnab handled only one-half of the value of rationed goods. Despite reform efforts, markets for producer goods failed to emerge, and the traditional system of material supplies and balances continued to function.

Two financial state committees, the Ministry of Finance and the State Bank (Gosbank), worked directly with enterprises, unlike other economic ministries. The Ministry of Finance monitored the use of credit by enterprises (working with the ministries), and was responsible for collections of revenues for the budget. At the local level, Ministry of Finance officials were interested primarily in collecting profit taxes, fixed payments, and capital charges from enterprises. The ministry played an important role in limiting managerial staff positions in state bureaucratic organizations and monitored compliance. Its responsibility for the development and execution of the state budget authorized the Ministry of Finance to give an independent opinion on the correspondence of economic plans to party economic policy—a right that Gosplan did not have.

Banking services were provided by Gosbank. This bank combined the services of a central bank and a commercial bank, but due to the absence of credit and capital markets Gosbank did not perform some traditional banking functions (open market operations, commercial paper transactions, and so forth). The major functions performed by Gosbank were to make short-term loans for working capital (supply of credits in accordance with credit requirements planned by the Ministry of Finance), to oversee enterprise plan fulfillment, to create money, and to monitor payments to the population as a center for all accounts. Therefore, Gosbank acted as the Finance Ministry's agent by booking the payments of taxes and fees to the state budget through Gosbank accounts while monitoring the flow of wage payments and credit through the economy.

The third group consisted of the State Committee on Prices (Goskomtsen ), the State Committee on Labor and Wages (Goskomtrud ), the State Committee on Science and Technology (Goskomtekhnika ), the State Committee on Construction (Gosstroy ), and the State Committee on Standards (Goskomstandart ). These committees worked primarily in setting rules and establishing norms to be observed by the ministries and their subordinate enterprises. For those goods whose prices were to be set centrally, the State Committee on Prices set the prices; for other goods, it established rules for price setting by individual ministries. The State Committee on Labor and Wages established staffing norms and spelled out the rules of compensation and pay. The State Committee on Science and Technology set norms for scientific work and collaborated with Gosplan on science policy. The State Committee on Construction set standards for documenting construction projects and assisted Gosplan in site and project selection. The State Committee on Standards established rules for judging quality standards.

The main function of state committees was the generation of information useful to the Council of Ministries and Gosplan in making planning decisions. Their information on norms, technology, and quality standards gave Gosplan independent data useful for the evaluation of ministry requests. The rules developed by functional state committees helped the Council of Ministries and Gosplan to constrain the activities of the industrial ministries in order to limit their opportunistic behavior.

See also: command administrative economy; gosbank; gosplan; ministries, economic

bibliography

Gregory, Paul R. (1990). Restructuring the Soviet Economic Bureaucracy. Cambridge, UK: Cambridge University Press.

Gregory, Paul R., and Stuart, Robert C. (2001). Russian and Soviet Economic Performance and Structure. Boston: Addison Wesley.

Paul R. Gregory