Development of Industry in the Estonian SSR under the Seven Year Plan (1959-1965) in the Context of the National Economic Council Reform

Abstract

The seven year plan was formulated and implemented in the period when an industrial management reform in the USSR was underway. The reform, which became known as the National Economic Council (NEC) reform, was aimed to decentralize the management of industry, including the construction industry. This reform was driven by the need for changes in the industrial sector in order to accelerate economic growth. Nevertheless, the freedom of the new administrative body, the National Economic Council, to make its own decisions on industrial matters was limited by the centrally established rules. General industrial development trends and production volumes were prescribed by the directives from Moscow. The task of the republican NECs was to increase the managerial efficiency by quickly solving the local economic problems and taking all measures to exploit local resources for the fulfilment of the plan targets. Expectations for the seven year plan were high. The plan was expected to guide the country to greater social and economic progress. The high-spirited seven year plan was based on the desire of the political leaders to make the USSR the greatest industrial power rather than on the real economic situation and opportunities for industrial development. The industrial output of the Estonian SSR was to increase 1.8-fold on the base of productivity growth. Higher productivity was to be achieved by the implementation of new technology and techniques and rapid development of automation. The Estonian SSR like Latvia and Lithuania had also to make huge contributions to the fishing industry of the USSR, as well as to the chemical industry of the USSR, in order to eliminate the backwardness in these areas. In addition, the Estonian SSR had the task to supply electrical energy for the northwestern region of the Soviet Union. According to the seven year plan, the Estonian SSR had to focus on the development of oil shale-based power engineering, building materials, engineering, fishing and fish processing industries. During the seven year plan period the industry faced many problems inherited from the era of five year plans. The industrial and construction management reform could not resolve these problems. As the economic system remained unchanged and the new management system continued to prefer administrative methods to economic methods, all the problems inherent in a command economy persisted. One of the most important problems was related to planning. The excessively large number of plans made their coordination and management difficult, especially because the plans were frequently changed. The fact that some plan parameters were changed while other, related parameters remained unaltered caused a lot of confusion. Industrial enterprises themselves had little influence on the drafting of their development plans. The system of plan indicators was too detailed; moreover, numerous indicators were fixed by a higher authority. So the industrial enterprise was still in the role of an executor. During the seven year plan like during the previous periods the total gross output volume in monetary terms was the most important indicator of success. As some enterprises met and exceeded the plan targets while others failed to meet them, the total gross output volume was attained thanks to the surplus, which covered the lacking part. The fulfilment of the plans in roubles was possible because the rate of inflation was not taken into account. The gross output volume indicator, however, did not motivate enterprises to diversify production, because it would have prevented the fulfilment of the quantitative indicators of the whole production plan. Each year the assortment plan of products was frequently not fulfilled in the case of one or another type of products and the quality of products was poor. This caused problems in consumer goods supply. One of the most pressing problems was the supply of raw materials, industrial equipment and apparatus because the existing supplies system was not able to provide enterprises the necessary amount of raw materials, equipment and spare parts in time. Production results were also adversely affected by the fact that new production capacities were not put into operation in time and stoppages, absenteeism and high staff turnover caused big-time losses. According to official statistics, the Estonian SSR fulfilled the major industrial goals. Looking at the results of the seven year plan it must be admitted that these were impressive, despite problems. However, one has to keep in mind that statistical indicators had been exaggerated by Soviet statistics from the very beginning. Instead of the planned 1.8-fold increase the industrial production in Estonia more than doubled during the seven year plan period. With regard to the labour shortage and the need to develop and implement new technologies and techniques, great attention was paid to raising the level of education and to training professionals for industry. Heavy industries (machine-building, power engineering, building materials and chemicals) developed at a rapid pace and made the most important contribution to the fulfilment of the seven year plan. The newly established Estonian apparatus and electronics industries as well as the machine-building industry developed on the basis of innovative production and technological advances and were able to create and effectively produce knowledge-intensive products. By contrast, in the consumer goods industry the growth was slow and the output of a number of important items did not meet the plan targets, which influenced badly the life quality of people.