Agriculture was still the Achilles heel of the Soviet Prometheus. Agricultural output at first increased (by 21 per cent in 1966–70, compared to 12 per cent in 1961–5), but thereafter the rate of growth declined (to just 6 per cent in 1981–5). Apart from bumper harvests (for example, 235 million tons of grain in 1978), most crops were mediocre or outright failures. Thus the yield for 1975 was a mere 140 million tons—the worst since 1963 and 76 million short of the goal. And because of limited port capacities, the government could import only 40 million tons, the shortfall causing a higher rate of slaughter and long-term consequences for animal husbandry. A desperate regime made new concessions on private plots and even encouraged city-dwellers to have garden plots. By 1974 private agriculture consumed one-third of all man-hours in agriculture and one-tenth in the entire economy. The private plots were phenomenally productive: in 1978, for instance, they occupied just 3 per cent of arable land but produced 25 per cent of total agricultural output.
Agriculture became a drag on the whole economy, devouring an ever larger share of scarce investment capital. According to G. A. E. Smith, its share of investment rose from 23 per cent (1961–5) to 27 per cent in 1976–80; allocations to the entire agro-industrial complex (for example, fertilizer plants) increased from 28 to 35 per cent. The United States, by comparison, allocated a mere 4 per cent of investment capital to agriculture. Although total output did increase (the yield for 1976–80 being 50 per cent greater than that for 1961–5), it did not keep pace with demand or rising production costs (covered primarily by gargantuan government subsidies). Subsidized bread prices were so low that peasants even used government bread for fodder. Nevertheless, spot shortages and price adjustments remained a source of hardship that periodically triggered food riots, such as those in Sverdlovsk (1969), Dnepropetrovsk (1972), and Gorky (1980).
The regime could boast of better results in the industrial sector, yet still failed to match past performance or reach plan targets. It could claim salient achievements like the mammoth ‘Baikal–Amur’ project—a 3,000 kilometre railway north of the old Trans-Siberian and linking eastern Siberia with the Pacific.
But the general record on output and productivity was dismal. Although the regime periodically spoke of revamping the system, it did little to raise critical indicators like product quality or labour productivity. Far more characteristic was the bureaucratic posturing, the attempt to solve economic problems with administrative decrees (which mushroomed to more than 200,000 in the late 1970s). Increasingly, the main goal was not reform but control, primarily through the formation of central industrial associations to ensure subordination and vertical integration in a specific sphere of industry.
This decline in industrial growth had many causes. Some were inherent in a ‘command economy’, with all its inefficiencies and bottle-necks, compounded by the incompetence of a superannuated leadership. Moreover, the hidden inflation of the Soviet price system (which allowed plants to reprice essentially the same products) encouraged managers to ignore productivity and avoid retooling that involved short-term costs and unwanted—and unnecessary—risks. So long as the state provided a guaranteed market and set the prices, it was pointless to cut costs or even worry about cost-effectiveness.
Labour constituted another major problem. The difficulty was partly quantitative: whereas the labour force had increased by 23.2 million in 1960–70, that growth fell to just 17.8 million in 1970–80 and to 9.5 million in 1980–90. For a labour-intensive economy heavily dependent on manual labour, the sharp reduction in labour inputs was devastating. Labour was also maldistributed, being concentrated not in industrialized areas but in backward regions like Central Asia, where the willingness to relocate was minimal. Labour also showed a high turnover rate (25 to 30 per cent) that directly undermined continuity and training. Nor was labour so tractable; strikes, rare under Stalin, openly challenged the regime’s authority. In 1968, for example, workers struck at twenty large industrial enterprises, chiefly because of grievances over wages and production norms, sometimes because of tactless management and unwarranted deductions.
Paradoxically, contemporaries saw the 1970s as a decade of unprecedented well-being. The Twenty-Fourth Party Congress (March 1971) renewed the perennial pledge to support heavy industry and defence, but also laid a new emphasis on consumer goods. The Ninth Five-Year Plan (1971–5) even projected higher growth for consumer goods than for capital goods; although that goal was not met, it did signal a marked change. Given the precipitous decline in agricultural and industrial sectors, the ‘mirage’ of prosperity is puzzling.
Much of the explanation rests in fortuitous circumstances on foreign markets. The primary elixir was oiclass="underline" after the 1973 oil crisis, the enormous profits from oil kept the leaky Soviet vessel afloat. A simultaneous commodity boom also increased revenues for an economy that exported primarily raw materials, making the terms of trade still more favourable. The surge in gold prices (for example, the 75 per cent increase in 1979) further added to state coffers. Although the USSR had already accumulated a substantial foreign debt (17 billion dollars), that sum paled in comparison with current revenues from hydrocarbon and raw material exports. As a result, the Soviet Union was able to use its hard-currency earnings to pay for the import of producer goods, consumer products, and endless shiploads of grain.
Alongside this inefficient state economy, a ‘second’ (or ‘black’) economy emerged to satisfy the demand for deficit goods and services. According to one estimate, some twenty million people worked on the black market to supply the demand for 83 per cent of the general population. Because of rampant corruption, repression of the black market became increasingly symbolic and inconsequential. The result was a subclass of ‘underground’ millionaires whose illicit earnings became a prime source of private investment after 1985.
‘High Brezhnevism’ also marked the apogee of the nomenklatura—a term denoting not merely the list of key positions, but the social and political élite who monopolized them. According to estimates for 1970, this élite included about 700,000 individuals: 250,000 people in state and party positions, 300,000 members in economic sectors, and another 150,000 in science and research. By 1982 this group had increased to some 800,000 people and, together with their families, comprised about 3 million people (1.2 per cent of the Soviet population).
Although a golden age for the nomenklatura, the Brezhnev era also attempted to improve the lot of the general population. Despite the rising cost of living (about 1 per cent per annum), real wages increased still more sharply (50 per cent between 1967 and 1977). The state also established a five-day working week, mandated a minimum vacation of 12–15 days, raised the minimum monthly wage (first to 60 roubles, later to 70 roubles), and expanded Khrushchev’s social welfare (which increased fivefold between 1950 and 1980). The regime gave particular attention to the ‘underclass’, as in the decision of 1974 to provide an income subsidy to alleviate poverty. It also made a concerted effort to improve the lot of collective farmers, three-quarters of whom initially fell below the official ‘poverty line’ (with a quarter even below the official subsistence minimum). The goal was not just to ensure social justice but to cauterize social haemorrhaging—the flight of rural labour, especially youths and males, from the village. As a result, by the 1970s rural wages were only 10 per cent lower than those for urban workers and were supplemented by a significant income from the private plots.