In three books published in 1951 and 1952, The Soviet Economy During the
Plan Era (1951b), The Soviet Price System (1951a) and Soviet Prices of Producers’ Goods (1952), later summarised in his book Soviet Industrialization 1928-1952
(1960), Naum Jasny sought to provide a systematic estimate of Soviet national income “to yield a reasonably trustworthy and reasonably comprehensive picture of the results of Soviet plans” (1951b, p3). Jasny’s distrust of official Soviet data was a major point of difference between his analyses and those of the Bergson school. Jasny was at pains to explain that his motivation for an accurate assessment of Soviet growth was very personal;
“All too frequently it is assumed that those who do not accept Soviet statistics underestimate Soviet attainments, and, more recently, that they underestimate the Soviet threat. This may be true of some, but not of the present writer. He is afraid of the Bolsheviki. He considers them a menace not to be underrated as long as they are able to channel perhaps half of the national income into new investment in the armed forces, and especially atomic-bomb development, even though such channelling implies extremely low consumption levels for the population” (1951b, p6).
Jasny wanted to establish “the rate of exaggeration of the official national income estimates” (1951b, p12/13);
“As soon as price and cost indexes are applied to such data, one of the principal mainstays of Soviet propaganda disappears. But the price and cost
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indexes are essential. Without them the data in current prices are almost useless. The reduced consumption levels can be easily ascertained also by analysis of consumption in physical terms” (1951b, p57).
Jasny needed to account for the effect of the rapid inflation, particularly in consumer goods, during the first decade of the plan. The inflation of consumer goods provided a mechanism through which planners could indirectly reduce consumption, to provide material inputs for investment in means of production. The 1928 plan allowed both nominally rising urban living standards and massively increased industrial development investment. This was impossible, a key debate during the 1920s was how to fund long term investments in hydroelectric schemes,
electrification, steel works and the like, which required massive quantities of inputs but only delivered output after several years. This problem was not abolished simply by wishing it away. Rather the Stalinists drove down consumption to provide
resources for investment in means of production.
Jasny estimated net national product according to the Soviet concept from the production end. This corresponded to national income at market cost (1951b, p12), (1951a, p132). The four principal items in net national product, net investment, military expenditures, private consumption, and expenditures on education and health services were established by an estimate of the gross outputs of agriculture, industry, construction, freight transportation, communications insofar as they served production and trade including catering economic sector. Outlays such as
depreciation were then deducted and the balance added up. All other services were disregarded (1951b, p11).
Clark had already shown roubles had different values depending on which sector of the economy they were used to measure. Material inputs were priced differently according to whether they were allocated to consumption or investment. Jasny estimated that at wholesale prices the 1926-27 rouble was “worth 70 U.S. cents in terms of farm products, 50 cents in terms of consumers’ goods, 30 cents in terms of producers’ goods, some 25 cents in terms of industrial constructions, and so on”
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(1951b, p26). Jasny showed that by 1937 the prices of all producers’ goods measured on a tax free basis were about 75% above the 1926/27 level, while the prices of all consumers’ goods had increased more than eightfold, and wages not quite fivefold (1951a, p37). Consumer goods paid huge taxes, typically from about 30% up to 88% of the price. A “turnover tax of 88 percent of the retail price would have raised that price by as much as 733 percent” (1951a, p74). This tax amounted to about 60% of the retail prices of consumer goods in 1937. In 1948 state subsidies to the national economy were equivalent to “…perhaps 70 billion roubles; on certain important goods, such as lumber and steel, the subsidies were at least equal to their prices” (1951b, p40).
Jasny repriced the principal budgetary items “…converting each item of expenditure to values at real 1926-27 prices” (1951b, p40). Separate conversion factors were worked out for the principal items of national income. In what was to be an important difference with Bergson, this procedure excluded the necessity of adjusting for either turnover taxes or subsidies. Jasny’s price indexes aimed “to make estimates of national income in current prices useful by applying price indexes to the various items of which it is composed” (1951a, p148). Jasny criticised the alternative procedure to “adjust the data for the various factors which distort the picture”
(1951a, p148). Like Gerschenkron Jasny noted that;
“The difficulties of statistical analysis arise in part from the fact that, because of great changes in the economic setup and important accompanying
circumstances, even correct indexes of national income and production are poor yardsticks for measuring changes in the Soviet economy during the plan era” (1951b, p6).
Jasny repriced these goods to remove this effect “…new commodities and new models of old commodities brought into line by the writer with those of commodities and models which existed in 1926-27” (1951b, p10). Since the “unchangeable 1926-27 prices” were actually falling, as productivity lowered the cost of manufactured goods, outputs expressed in those prices regularly showed
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much greater increases than the outputs in physical terms (1951b, p19). As a result “huge disparities” can be observed between increases in industrial output computed at “unchangeable 1926-27 prices” and increases in output of the principal raw materials measured in physical terms (1951a, p11), (Jasny 1951a, p108).
Jasny recalculated outputs with the result that the economic significance of the industrial output and especially of producers’ goods and construction relative to agricultural production in the beginning of the Plan era was “considerably lessened” (1951b, p26). Jasny’s index was based partly on output series weighted by his Soviet “real 1926/27 prices”, and partly on adjustments of various official Soviet
aggregates. Hodgman, a proponent of Bergson’s use of current Soviet prices, thought it was doubtful if Jasny’s price indices covered a sufficiently varied and broad
selection of products to be truly representative. Hodgman thought that by not separating subsidies and profits from the price indices Jasny’s estimates had a downward bias for the period between 1928 and 1937 (Hodgman 1954, p101-103).
In spite of the great rise of nominal wages the share of wages in the total production costs of industry declined “rapidly all through the peaceful years of the Plan era” (1951a, p22). Direct rationing from 1928 to 1937 was only briefly relaxed in the late 1930s, before being re-imposed after the Nazi invasion in 1941. After the end of the war, and once they were able to re-establish central control, Soviet planners preferred nominally low prices for consumer goods combined with nominally high wages. As demand did not affect either the price of goods or their supply, this was effectively a form of forced saving. It ensured that the entire
available quantity of consumer goods was purchased, but meant that a proportion of wages could not be spent. This provided the illusion of prosperity while forcing workers to save their surplus roubles (Chapman 1963).
State enterprises competed for labour and this ensured that planned increases in nominal wages were fulfilled, but for a simultaneous increase in consumption to take place, then productivity growth would have needed to exceed the rate of increase in the urban population. Jasny credited Bergson for demonstrating that
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Soviet data for the number of wage earners, the average wage and the total wage fund did not coincide (1951a, p26). The emphasis of Stalin’s plan was an aggregate increase in output, not the efficient use of inputs to achieve it. Productivity growth targets were not generally met.
Nominal outlays on labour per given product rose, while living standards fell. Inflation was the inevitable result. This was compounded by the catastrophic fall in agricultural production in the early years of the plan. In this period low real wages corresponded to relatively very high prices of consumers’ goods (1951a, p15-18). Jasny pointed out the misleading way in which the Russian series on crop production changed in 1934, from the actual yield (barn yield) to the gross yield including harvesting losses (biological yield) (1950, p94).
Jasny criticised Bergson for too uncritically accepting official Soviet figures. Bergson’s study of Soviet wages differentials in the 1930s made no reference to the overall reduction in real wage levels in the first phase of the plan, even while it pointed out the stratification of Soviet society (Bergson 1944). But Bergson was able to demonstrate that Jasny’s figures for Soviet consumption arrived at very similar measures of increase after 1933, such that by 1937 consumption had at least reached if not exceeded its 1928 per capita levels (Bergson 1953, p11).
Gerschenkron complained that Jasny should have informed the reader that “information on the change of methods is derived from Soviet sources”
(Gerschenkron 1950, p250). In Jasny’s opinion it was the differences in wage levels that meant it was impossible to say that, “The national income of the USSR is so many per cent of that of the United States” (Jasny 1951b, p13). Jasny explained;
“In calculating the real expenses on investment and “defense”, the rouble expenditures shown by Soviet data either must be recalculated to entirely different prices (foreign, or Soviet pre-Plan prices), or they must at least be adjusted for turnover taxes and deficits or profits. In these adjustments not only the direct subsidies to given industries, but the indirect ones to industries
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using subsidized investment goods, raw materials, and transportation facilities have to be considered” (1951a, p145).
Bergson showed that Jasny’s calculations for 1928 to 1937 were in fact at current prices, a form of Laspeyres not Paasche index. Jasny described his volume measures as “real” 1926/27 prices when they were actually current price weights (Harrison 1999). As a result Jasny’s estimates of Soviet national income were remarkably similar to Bergson’s (Davies, Wheatcroft, Harrison 1994, p35). Bergson thought that;
“Jasny sets himself the interesting task of calculating Soviet national income in terms of the same standard as is used in the official statistics, i.e., 1926-27 prices, but with a valid valuation of new commodities. I believe there is a good deal of foundation for the assumption implied throughout that the rouble price system was more meaningful on the eve of the five year plans than it was later … I shall point out… however, some limitations in the dollar standard of Clark and Wyler that arise because of the differences between Soviet and American preferences and technology. Considering the vast economic transformation in the USSR under the five year plans, the reader will readily see that the procedure used by Dr. Jasny must encounter entirely comparable difficulties (Bergson 1953, p6).