administrative institutions. The only way the quality of the performance of an administrative institution can be measured is by looking at the production performance of subordinate enterprises. Khozraschet accounting
procedures mean that the financial situation of administrative institutions, and therefore the amounts of money they have available for material incentive is placed in dependence on the effectiveness of work of subordinate enterprises. Soviet writers on these matters give no idea of how it is possible to determine the degree of responsibility of administrative workers for an enterprise's performance. Vopr. ekonomiki, 12/68, p. 43; Sovetskoe gosudarstvo i pravo, 1/72, p. 79.
position held and formal qualifications. Clearly the mobilising effect of such a system is minimal.^
The second problem is working out indicators that do not allow for abuse. The system should be designed so that in working for his own individual or collective interests, the worker will automatically
fulfil the interests of society as a whole. This is not always easily done. For example, many scientific
institutions have used the number of scientific articles published as an indicator of research performance. This has led to a great increase in the practice of leading workers forcing their subordinates to add their names as
2
co-authors of articles.
The third problem has been finding the right level of material benefit to provide maximum mobilisation. If bonus payments make up too small a percentage of total income, their mobilising effect will be slight; if they
1 It is also contrary to the fundamental socialist (as distinct from communist) principle of "to each according to his work". This principle is of enormous practical significance in that it
justifies differential rates of material reward. See Kom. Sov. Latvii, 6/72, p. 72.
2 Gvishiani, D.M: Voprosy teorii i praktiki
upravleniia i organizatsii nauki, Izd. "Nauka", Moscow, 1975, p. 213; Agursky, op. cit., p. 42; P.zh., 12/76, p. 41. On the broader scale there has been the problem of ministries and their enterprises raising profitability, since 1965 the main indicator of performance, simply by raising prices rather than by improving product ivity. Sov.gos. i pravo, 11/71, p. 71. Scientific institutes have also been guilty of this practice. Sov.gos. i pravo, 12/71, p. 8.
make up too-large a proportion, there are two possible effects. If total income varies too much, enough to
affect the worker's life style, the effect on his sense of security could produce such discontent that a decline in productivity results, and a loss of the regime's
legitimacy; if bonuses are artificually kept steady at such a level as to guarantee workers a predictable standard of living, they will come to regard the bonuses in the same light as wages - a guaranteed income for which no particular effort needs to be made. Soviet writers believe that they have found the right level at about 10 to 15% of total income."*- However the problem then becomes a more serious one of finding sufficient cash to be able to pay bonuses at such a level. Many non-production institutions cannot be expected to make a profit. Therefore they are unable to build up any sort of fund for material incentive. Fixed payments for material incentive from the state budget destroy one of the fundamental principles of material incentive - that it be financed by the efforts of
individuals working together in a collective, who then share in the benefits of their efforts.
This problem is probably the main reason that systems of material incentive are virtually non-existent in
1 Zav'ialov, V.G: Problemy material 'nogo stimulivovaniia truda rabotnikov nauehno- issledovatel1skikh organizatsii, synopsis of a dissertation for degree of Candidate of
Economic Sciences, Leningrad State University, 1971, p 12.
educational and cultural institutions. Indicators, even if not entirely satisfactory, have been devised for
socialist competition in these institutuions. If indicators, therefore, are not the main problem, the problem must be obtaining the financial resources to operate a system of material incentive.
Indicators appear to be the main problem in administrative institutions. There have been problems with building up funds for material incentive to an effective level.'*" However as time passes this problem
2
should be reduced.
For measurement of the quality of the performance of the collective as a whole we have seen that administrative institutions use the performance of subordinate enterprises
3
measured in terms of profitability. But there is the is the further problem of determining the performance of
1 Sovetskaia Moldaviia, 22/9/73, p. 4.
2 Of course this refers only to institutions that have subordinate production enterprises. Their funds for material incentive are almost invariably financed through deductions from
enterprise profits. Administrative institutions that supervise non-production organisations have no such source of funds. Thus in 1968 bonuses constituted only 2% of the incomes of the
officials of the Latvian Ministry of Education, although in 1971 the percentage had reached
3.38. Kom. Sov. Latvii, 6/72, p. 72.
Again administrative institutions which supervise non-production organisations have no such
measure. 3
individual administrative officials. They cannot be tied individually to any physical output.^" But what little information I have on the indicators actually used to determine payments to individual administrative officials
suggests that they are determined by collective plan fulfilment. Officials in the Latvian Ministry of Local Industry are paid bonuses quarterly according to three
basic indicators of production plan fulfilment - the volume of production, the assortment of products, and the level of profitability of the branch as a whole - as well as other variable indicators presumably like those described in a 1971 Sovetskoe gosudarstvo i pravo article. They included some sort of measurement of the quality of decisions made and documentation prepared, the efficiency of work with letters and grievances, and the fulfilment of orders and
2
other tasks. Whatever indicators are used, in administrative institutions with subordinate production enterprises systems
3 of material incentive have been developed and widely applied. 1 Thus socialist competition in the Turnover
Department of the All-Union Ministry of Finance is based on the following rather extraordinary indicators: the improvement of relations between workers, development of a feeling of collectivism,
friendliness at and away from work and the help officials give to each other to foster better moral qualities in Soviet man! Figurin, T.A:
Partiinye gruppy v sovetskikh uchrezhdeniiakh, Izd. "Sovetskaia Rosiia", Moscow, 1974, p. 10.
2 Sov. gos. i pravo, 4/71, p. 54.
3 For details on, for example, the system in the Ministry of Instrument Making, see Planovoe
In other institutions they are much rarer.^
Among non-production institutions only scientific research institutes have the objective conditions to allow reasonably effective operation of systems of material
incentive. It is possible to devise indicators to measure the performance of both individual scientists and their
collectives, and with institutes being increasingly involved in contract work, it is possible for them to build up funds for material incentive of an effective size. Therefore it is not surprising that it is in this category that material incentive has experienced its greatest development.
One of the pioneers of material incentive in research institutes is the Karpov Institute of Physical Chemistry. In 1976 Pavtiinaia zhizn' published an article by the director and party secretary of the institute on the
system. From this article we can derive a good idea of a well-developed system of material incentive, and the part of the PPO in it.^
1 When I asked the head of a relatively
small, but republican level, administrative organisation whether his organisation had a system of material incentive, he said that it was impossible since there was no way to
measure performance or provide bonuses. But he then went on to say that he, working with the party buro and trade union committees, was able to reduce the wages of officials not working adequately, and to give good workers
free trips.
When the system was introduced in 1968,^ guaranteed wages were reduced by 25 to 30% and the
director, in accordance with decisions of an attestation commission, was given the right to pay bonuses on the basis of the effectiveness of each individual's work. The bonuses are paid yearly. For scientific workers without academic degrees bonus payments cannot increase income more than 40% over the pre-1968 level; for those with degrees the limit is 25%.^
The institute has four attestation commissions, three sectional and one central, made up of leading
3 scientists and party, trade union and komsomol representatives. Attestation is done first by the head of the section in
which the individual works, then by the sectional commission, the central commission, and is finally confirmed by the
director. The following criteria are used in evaluation: the theoretical and experimental quality of research; the level of initiative and creative independence; the scientific and practical significance of the results of research; and
1 The system replaced one where the main way to get higher pay was to gain an academic degree. 2 Production workers, laboratory assistants and administrative workers are not covered by the system.
3 The membership of the central commission includes a secretary of the party buro,
although not the first secretary, the chairman of the trade union committee, and the
participation in the implementation of research in production. Although bonuses are paid yearly,
attestations take place once every two years. The results of all attestations are examined in a meeting of the party buro and then in a general party meeting.^
From the discussion so far it can be seen that the PPO has a continuing role to play in the operations of the material incentive system. There is party representation on the attestation commission, although no firm conclusions on the precise effect such representation might have are
2
possible. One could expect that workers who had caused any trouble of a political or ideological nature would meet problems from this quarter. The same could be said of the subsequent examination of the commissions' findings in the party buro and party meetings.
1 The article reports that the system has met with very few problems. After the first attestation there were only seven complaints. There were 483 scientific workers examined on this occasion, of whom 256 retained their former level of pay, 126 had theirs raised, and 71 had theirs lowered. These last were mainly highly paid and qualified people.
2 Kommunist (Vilnius) speaks of the influence of the communists who are members of the commissions for the payment of scientific workers in
Lithuanian research institutes. Kommunist (Vilnius) , 6/72, p. 33. One book on the
organisation of scientific research speaks of the role of the treugol’nik (triangle) of a laboratory or department in defining the coefficients used to evaluate the work of individual workers. Treugol'nik usually refers to the head of the laboratory or department, its party secretary, and trade union chairman. Gvishiani, op. cit., p . 216.
However in keeping with its staff generalist role the part the PPO played in the introduction of the system and in broad control of its continuing operations are particularly significant. When permission had been received from higher authorities for the introduction of the system the party buro held a meeting with invited guests, including the secretaries of subordinate party
organisations and communist members of the Academic Council The meeting examined the matter of the formation and the memberships of the attestation commissions. The whole system was then examined in an open party meeting. Before the second attestation in 1970 the party buro established a special commission for examining suggestions put forward by workers on the conduct of the attestation.^- The article also refers to the importance of the institute's communists convincing the collective of the value of the system and ensuring that it is not implemented in an "administrative" way. This shows the role of the PPO in operational
indoctrination, in this case persuading the members of the
1 For another account of such PPO involvement, see Kom. Sov. Latvii, 1/71, p. 61. The PPO in the Latvian Ministry of Local Industry took an active part in working out the system of payments for officials. The PPO also has an influence over such matters through the trade union organisation. The establishment by
institutional leaders of the procedures for the use of material incentive funds must be done with the agreement of the trade union
organisation. Plan, khoziaistvo, 11/71, p. 15; Iampol'skaia, Ts.A: Obshchestvennye ovganizatsii v SSSR, nekotorye politicheskie i organizatsionno pravovye aspekty, Izd. "Nauka", Moscow, 1972, p. 63.
collective of the value of new operational procedures, and the links of such indoctrination with the staff generalist role.
We have seen that problems of defining indicators and obtaining funds have seriously limited the use of
systems of material incentive in non-production institutions, particularly in cultural and educational institutions.
This has helped increase the emphasis on socialist
competition and other forms of "moral" reward as a means of mobilisation. These have the advantage that because
they lay the stress on "moral" considerations less concrete indicators can be used, and because they do not rely on material reward for any effect they might have they can be
implemented in institutions without their own sources of income.^
1 In fact, however, many so-called "moral" rewards have a very materialistic appearance. One book on moral incentive included among its list of moral rewards such things as valuable prizes, trips to rest homes, tourist trips, subscriptions and
tickets to theatres, etc. Moral*noe stimulirovanie truda v usloviiakh khoziaistvennoi reformy, Institute of Economics of Industry of the Ukrainian Academy of Sciences and the Donets oblast* organisation of
Znanie, Donets, 1971, p. 14. Even such apparently non-material rewards as Diplomas of Honour, Red Banners and signatures in the work book appear to have a material significance not generally public ised. After one book gave some data on the relative popularity of various forms of moral reward, the statement was made that "the least popular is the use of the work book as a means of encouragement, since this gives the worker practically no
advantages with regard to transfers to other work, with regard to retirement onto a pension, or in the process of his work activity". Smol'kov, V.G:
Sotsialistioheskoe sorevnovanie v neproizvods tvennoi sphere, Profizdat, Moscow, 1975, p. 132.
Therefore it is not surprising that educational institutions have well-developed systems of socialist competition. The most detailed account of one appears in a 1972 article in Vestnik vysshei shkoly on the Leningrad Polytechnical Institute.^ The competition was organised jointly by the institute's rectorate, party committee and trade union committee to determine the best faculty,
department (kafedra) and academic group. The indicators for faculties and departments are in four sections.
Firstly, the quality of personnel is considered - the numbers of faculties or departments headed by professors or doctors and the qualifications of their teaching and scientific staff. Secondly, account is taken of research work undertaken - the volume of contractual work, the
degree of fulfilment and its effectiveness, the fulfilment of projects allocated under the state plan, the participation of students in research work, links with and the introduction of the results of research into production. Thirdly,
there is consideration of academic work - the publishing of textbooks and scientific manuals, the work of students on individual plans, and an evaluation of diploma projects and work. Finally, an evaluation is made of the work done
outside class - the indoctrination work of teachers outside their class duties, the participation of students in social work, physical education and sport, and the "third semester"
(work done, usually on farms or in construction, during the summer vacation), and a consideration of student discipline. For faculties there is a total of 29 indicators, for departments, 25.
For the academic groups there are three sections with a total of 12 indicators. Firstly, there is the study process - the pass rate, work on individual study plans, and the monthly evaluation of progress made. Research work is again considered - the participation of students in
scientific work, the level of scientific work in the
educational process, and scientific discussions and seminars. The third section is concerned with work outside class and is identical to the fourth section described above.
Scores for all these indicators are determined by permanent all-institute and faculty commissions with representatives of the party, trade union, deans' offices and rectorate.
Successful sections are rewarded with various titles and diplomas, while lists of results and photographs of the leaders of the best sections are publicly displayed.
Administrative and scientific institutions also have well-developed socialist competitions. Usually the same sort of indicators, based on the fulfilment of
material Stimulation are used, but with some less "material" indicators added.^
One would expect that PPO involvement in socialist competition would take much the same form as its involvement in material incentive, that is, influence over commissions responsible for setting indicators and evaluating performance and extensive agitation activities. Indeed the greater
"moral" character of socialist competition and the setting of agitation work as a common task for people involved in competition could lead one to expect even greater PPO
involvement. In fact there is no evidence of this greater involvement. Although reports such as that quoted above on the Leningrad Polytechnical Institute make it clear that PPO's do play a significant role in the organisation of socialist competition, there is some evidence to suggest that much of the work in this area is left to the trade union. Lakhtin declares that the conditions for socialist
1 For example, the section on "social indoctrin ation and ideological work" in the competition adopted by the Institute of Physical Chemistry of the Ukrainian Academy of Sciences includes such indicators as work in the institute aktiv
(work on the editorial board of the wall news paper or in people's control groups and various commissions), political study, participation in artistic activities, in the beautification of the institute's grounds, and in trips to the Young Pioneers' camp, and in sport, including consideration of successes gained in that area. Lakhtin, G.A: Sotsialisticheskoe sorevnovanie v nauchnykh uchrezhdeniiakh, Profizdat, Moscow, 1975, p. 50.
competition could be determined by a specially formed commission of representatives from the administration,
party committee, trade union and other social organisations, but feels that probably the trade union could do it by
itself.^
Conclusions on the effectiveness of material and moral incentive are not easy, and are beyond the scope