Russian Agricultural Planning

Russian Agricultural Planning

Agriculture is of key importance to the Soviet economy. It employs one-third of the labor force and provides essential raw materials for industries and food for the industrial work force. We have seen that agriculture was squeezed to provide resources for the industrialization drive of the 1930s; until about a decade ago, in fact, little was done to confront the related problems of low yields, low productivity, low incentives, and administra­tive inefficiency. Soviet leaders now recognize the need to modernize agri­culture by increasing the level of farm investment and streamlining the in­centive system for workers and managers. Despite this new emphasis, there have been recurrent harvest failures (in 1963, 1965, and 1972), making it necessary to import'grain, because of the importance of farming in the total Russian economy, poor crop years have a large adverse impact on the over­all growth rate. We will attempt to identify sources of low productivity by examining the organization and planning of agricultural output, including the various attempts at agrarian reform during the past 15 years.

It should be kept in mind that the state of Soviet agriculture is an extremely important domestic political issue; in fact, improvements in the planning structure have sometimes failed because of political meddling. Khrushchev's failure to deal effectively with the agricultural crisis was an important factor in his premature retirement.

The Organization Of Agriculture

Agricultural units in the Soviet Union are organized either as state farms (soukhoz) or collective farms (kolkhoz). State farms employ laborers at standard wages, just as an industrial enterprise might. Profits of the state farm accrue to the state budget. State-farm employees and managers, like factory workers, are paid on an incentive basis, including bonuses, social insurance, and other benefits.

A collective farm is a cooperative and owns its equipment and live­stock. The collective farm is nominally self-governing, and its profits are distributed among the members of the collective according to their con­tribution to production. In reality, the Communist Party cells are very active in influencing the management of the collective farms. Historically the lot of the state-farm worker has been somewhat better than that of the collective-farm worker because the state-farm worker is guaranteed an in­come, while the income of the collective farmers depends on the vagaries of the weather and the price policies of the government.

By 1966 there were over 12,000 state farms in the Soviet Union. They employed about eight million people and averaged about 18,000 sown acres per farm. The responsibilities of the manager of a state farm are much the same as that of a factory manager, and so are his rewards. An employee of a state farm has a private plot of about one-third of an acre on which he may build his own home and cultivate his own crops. State farms usually specialize in a few products and need not be as self-sufficient as collective farms since they have access to the state budget and pay regular wages. Having met with increasing recent success after long years of deficit operations, the state-farm system has absorbed a number of formerly collective enterprises.

The comparable figures for collective farms are 36,500 farms, em­ploying over 18 million workers on an average of about 7,000 sown acres. Thus the average size of Russian farms is very large by American stand­ards. Collective farms account for nearly 80 percent of the country's cotton output, half the total grain, and one-third of total livestock, milk, and eggs. The collective is much more self-sufficient than the state farm.

In spite of a "model charter," which ensures democratic self-government consisting of a farm chairman and a committee responsible to a meet­ing of the general membership, government and Party planning and influ­ence dominate the collective farm. Collective farmers are also allocated private plots to cultivate for their own use. They are larger than in the previous case—1/2. to 2 1/2 acres, depending on climate and fertility—and in the past have occupied a position of prime importance to the collective farm workers. The product of work on his private plot accrues entirely to the worker and can provide him with his necessities plus a cash crop that he may take to market. Collective-farm markets selling produce above gov­ernment prices are prominent in Soviet cities. Private plots on collective farms, although only 3 percent of total cultivated land, were responsible for nearly 1/3 of gross farm output and Vi of livestock production in 1964. Before 1966, collective-farm workers received no guaranteed wage for their labor on behalf of the cooperative. Each task was assigned a "workday" value. At the end of the year, when all expenses had been deducted from the collective's revenues, the workday unit was assigned a value and the remaining revenues distributed to members according to their accumulation of workdays. A particularly skilled or difficult job might be assigned a workday value of two, while a simple task would be evaluated at half a workday per day's labor. Owing to large compulsory deliveries to the government at low prices, the income received by the worker from the collective was very low. The incentive for the worker to devote his energy to collective pursuits was small, and he had to depend on his private plot. This problem was peculiar to collective farms before 1966; after 1966 tasks were assigned rouble values, and workers are now paid monthly wages from farm revenues. Profits are distributed at the end of the year in the form of bonuses on the basis of the year's wages for each worker. Current Soviet policy recommends that collective workers' incomes should be at least as high as those of state-farm workers. Private plots are recognized as essential to peasant morale and welfare, but each member must work at least a minimum number of days in his collective brigade.

Agricultural Problems

Low Productivity and Yield


Soviet agricultural productivity lags significantly behind the industrial sec­tor and behind Western agriculture. At the fiftieth anniversary of the Rev­olution, the Russians could proudly boast of gains in industrial commodi­ties, but agricultural output was only 1.8 times the 1914 production of butter. In the United States it requires six farmers to provide food for 100 people, while in the USSR 40 farmers are needed for the same task. We must recognize that the Soviet Union, while rich in natural resources, does not possess a great deal of arable land. Much of the land under cultivation receives too little moisture or experiences a very short growing season, while other areas are too marshy. The Soviet Union has a great diversity of climates and soils, but centralized agricultural policy has made this a more serious handicap than it need be. The wide swings of agricultural policy, which periodically has met with great temporary success, eventually caused progress to grind to a halt in the face of nature's adversity. Thus as in industry, a need for decentralized decision making became obvious.

Agricultural Incentives

Another problem in agriculture was the failure of incentives for collective farm workers. Farm chairmen had to be ruthless in exacting work on be­half of the collective from members whose only concrete hope for a liveli­hood centered around their private plots. The brighter and more indus­trious peasants made their way to the cities and the state farms, which further aggravated the manpower shortage due to the casualties of World War II. The compulsory deliveries to the state at very low prices kept the collectives short of funds to distribute and invest. The farm chairman could not calculate the costs and revenues of crops, and most of what was grown was determined by what had to be delivered. The chairman had to answer to the agricultural ministry, the local Communist Party secretary, the Ma­chine Tractor Station (which controlled all the mechanized equipment for the neighboring collective farms), and the farm members. Investment in agriculture, mainly of tractors and some increased fertilizer production, was far from adequate, being neglected in favor of strategic production in heavy industry. When investments were finally made, they typically failed to consider local needs and advantages.

An Illustration from Russian Fiction

The student of economic systems can sometimes learn a great deal from works of fiction. One example is a short novel that appeared in 1963, dur­ing the post-Stalin thaw in literary expression. "The New Life" is the name of the collective farm on which the hero, Comrade Anany Yegorovich, is the manager. He is sensible and conscientious in performing his duties, a task made infinitely more difficult by bureaucrats and Party officials who do not understand the realities of farming and by the collective farm mem­bers, who have a discouraging list of excuses and disabilities that prevent them from working efficiently.

The story is simple enough: The manager puts first priority on har­vesting hay while the weather is dry; higher officials order him to switch to silage (green fodder) cutting in order to meet the district production quota on time, even though the silage could survive rainy weather and the hay could not; the rains come, and in a desperate effort to save the crop Yegorovich attempts to organize a crash program of Sunday work among the collective farm members.

As he trudges from cottage to cottage in the kolkhoz village, many of the troubles that have haunted Russian agricultural planning are re­vealed in miniature. The chairman of the construction brigade is home drunk, and the cow barns may not get finished before winter; a group of old women are picking mushrooms for sale in the free market rather than working for the collective; workers in the timber industry who remained in the village after they quit the kolkhoz for better wages and working con­ditions are out of the chairman's control; a disgruntled peasant refuses, bemoaning the fact that the farm is too poor to allow each member to keep a cow. Even the milkmaids, the only young and enthusiastic workers pres­ent, are dreaming of marrying city officials and escaping the drudgery of farm life. The Party is no help; members on the collective are bureaucrats, teachers, or others out of contact with day-to-day farming decisions.

Discouraged, the chairman spends the evening at the village club; he drinks too much and awakes very late the next morning to find the whole village single-mindedly at work bringing in the hay. He is amazed to learn that the night before he promised a 30 percent bonus for all who would work on Sunday. The prospect of extra earnings is enough to lure malinger­ers away from their private plots, home improvements, and imaginary bad health.

The author's diagnosis of the situation is clear—too much bureau­cratic meddling, too few incentives to keep younger workers from drifting off to better jobs, too few amenities for those who remain.

The same old story. It was like a vicious circle! To make the daily labor norm attractive, people had to work. What other source of income was there for the kolkhoz? But to get people to work, you had to have an attractive daily norm. Where was the solution? In the district committee they had told him, "You're giving bad leadership. You've softpedaled agitational and educational work." But how were you going to bring agitational pressure on the kolkhoz worker of today? With­out money, agitation didn't get you anywhere.

Money, exemplified by the 30 percent bonus, got the hay crop har­vested. In solving a short-term problem on "The New Life," it also pointed the way toward upgrading the quality of labor in the agricultural sector and making it attractive for young workers to stay. Finally, the novel indi­cates that there are reserves of motivation and productivity waiting to be tapped if central planners would alter the incentive system and provide funds for modernization. Recent reforms in Soviet agriculture indicate that some of these suggestions are beginning to be acted upon.

Agricultural Reforms

Khrushchev and his successors recognized the problems of agriculture and set about coping with them. At first they dealt with them as they dealt with any economic bottleneck—by supplying more state directives. It soon be­came obvious that radically new approaches to farm problems were required. Some of Khrushchev's schemes were called harebrained, but they led to basic changes in the organization of the agricultural sector.

The Virgin-Lands Campaign

In the years immediately following Stalin's death, his successors realized the neglect into which Soviet agriculture had fallen and the abominable conditions that characterized peasant life. Farm prices were raised, and the disparity in price between compulsory deliveries and sales to the state was reduced and finally abolished by 1957. The output response was encour­aging; from 1956 to 1958 gross agricultural output exceeded the 1950-1952 yield by 48.7 percent.3 The new Soviet leaders, struggling to consoli­date their positions, wanted quicker and even greater success in agriculture. Khrushchev hit upon the idea of opening up new lands for crops. These lands had either too little moisture or too short a growing season to be profitably farmed. During the 1950s some 90 million acres of virgin land were brought under cultivation. Students from universities left their studies for a volunteer tour in the virgin lands; others were attracted by promises of better housing and living conditions. In the first years the pro­gram was an overwhelming success, and the lands yielded to their full capacity with very little investment. By the beginning of the next decade, however, dust-bowl conditions, similar to those prevailing in the American Southwest in the 1930s, caused many of the virgin-land experiments to be abandoned. Such conditions developed because the land was abused in a centralized campaign that was unresponsive to local conditions. In addition, the failure to deliver on promises of amenities in the newly settled areas discouraged migration and caused many of the pioneers to return to older farming regions.

Machine Tractor Station Reform

Before 1958, all heavy farm machinery was controlled by government-owned and operated Machine Tractor Stations (MTS). Collective farms paid for the services of the machinery with shares of its crops. The MTS served as a source of Party influence on collective farms and was an added limitation on the freedom of farm chairmen to decide what and how crops should be raised. It paid no capital charges and absorbed more investment funds than was desirable. Farm chairmen complained bitterly of the ineffi­ciency of the MTS and of the undue influence it exerted over their manage­ment. By 1958, however, because collective farms were being consolidated and financial reserves were being built, liquidation of the MTS became feasible. It also symbolized how far the Communist Party had come in pacifying and unifying the countryside since the bitter resistance of the original collectivization drives.

In March 1958 the decision was made to sell the equipment con­trolled by MTS to the collective farms and to transform the stations into repair centers. Credit arrangements were made, and by the middle of 1959 half a million tractors, several hundred thousand grain-harvesting com­bines, and other equipment totaling over 17 billion roubles ($4 billion) in value, were transferred to collective farms. The MTS became supply depots for new equipment as well as repair centers. The three million MTS em­ployees displaced by the reform were attached to the collective farms they had formerly served. They were originally given special compensation be­cause the income of collective farmers was low, but this was equalized by later guaranteed-wage reforms for members of collectives.

At this time the dual compulsory-delivery-state-purchase system was eliminated and replaced by a compulsory-purchase quota system that further limited the decision-making authority of farm chairmen. Collectives were no longer permitted to substitute types of crops in their deliveries. Thus the government gave with one hand and took with the other. On bal­ance, prosperous collective farms were rewarded by the reforms, while poor farms suffered the increased burden of paying for the equipment. Much of the equipment was in deplorable condition and had to be retired in the next year or so.4 Thereafter, government campaigns dealt with introducing new crops such as corn and winter wheat, which had been successful in other countries but were doomed to less than moderate success in the varied climates of the Soviet Union. Khrushchev's corn program (the result of his visit to an Iowa farm) was extensively ridiculed after his retirement.

Recent Reforms

The reforms made by Khrushchev's successors have centered on two main areas: increased monetary reward for the collective-farm workers and in­creased investment in the agricultural sector. In addition, some state farms have been put on a profit-bonus basis with fewer quotas; this is similar to the industrial system. These reforms have been successful in increasing out­put and reducing costs, and it is clear that the practice is being extended throughout the state-farm system. On collective farms, the guaranteed-wage system discussed previously has been instituted and the disparity between state- and collective-farm incomes thereby reduced. Farm prices have been raised, the incidence of taxes on poor farms decreased, and the price of some machinery and of electricity reduced. The emphasis on agricultural investment in recent plans is greatly increased, and drainage and irrigation programs are being pursued extensively. It seems that the importance of material incentives and of some degree of local autonomy have finally been recognized by the political leaders of the Soviet Union. It is interesting to note that charges of mismanagement in the agricultural sector seem to be the point of greatest vulnerability for political authorities.

Secret dispatches from the U.S. embassy suggest the Communist Party leader Leonid Brezhnev, the top man in the Kremlin, has fought off a challenge to his leadership. He got into trouble over the same issues that led to the late Nikita Khrushchev's fall from power in 1964. Khrushchev was blamed for agriculture failures which forced him to exchange Soviet gold for Western grain. . . . Now another disastrous harvest has compelled Brezhnev to lay out gold for grain.

The late-ripening harvest in the Asian territories had been promising. But cold rains flattened the fields, and mismanagement compounded the catastrophe. Farm machinery broke down and went unrepaired for lack of parts. Wet grain turned mouldy for lack of drying facilities. Grain shipments bogged down for lack of trucks.

Soviet agriculture can thus be seen as still far from matching the achievements of the industrial sector. Farm output is still extremely vulner­able to climatic variability, a situation that could be partly alleviated by greater attention to irrigation, to application of fertilizer, and to develop­ment of faster-maturing varieties of feed grains. Output of farm machinery must be increased and its design made compatible with the skills of the people available to operate and repair such equipment.
Even assuming all of these items are given priority, however, the twin problems of effective central management and of an effective incentive sys­tem for the individual collective-farm member will remain. A recent ac­count by American travelers documents these problems:

Everywhere we have travelled in the Soviet farm areas we have seen administrative and organizational shortcomings, low operational efficiency, low productivity of labor and land, and backward conditions of village life. Collective farm fields have too many weeds, and collective and state farms produce crop yields that would be considered very poor in Czechoslovakia and Poland, in Western Europe and the United States. Indeed, Soviet average yields would spell bankruptcy for the individual farmer in Western Europe.

During our journey in 1967 we saw sugar beets languishing where they should not have been planted and corn which (for the same reason) would never be over three feet tall. When we asked why these crops were sown, the answer was always "It's in the plan."

There is increasing emphasis on state farms and economic self-accounting (profit-bonus) management for state farms. Observing the suc­cess of large corporate farms in the United States, this may prove a profit­able turn of events. Some of the new consolidated farms, however, are much larger than most American commercial and even corporate farms. The imbalance of Soviet economic growth that has led to the conditions just described figures heavily in the evaluation of Soviet economic perform­ance that follows.

in evaluation of the soviet economic system

A half-century of historical experience has been accumulated on which to base an evaluation of the Soviet economic system. A provisional judgment involves measuring the increase in goods and services produced (and how much of that increase benefited individual citizens) and an inquiry into how nonmaterial dimensions such as creativity, diversity, and individual free­doms have fared under a regime of centralized economic planning. In mak­ing such a judgment, we will follow the example of Abram Bergson, the foremost American expert on the Soviet economy, in applying economists' criteria to an assessment of the Russian experience. These criteria are growth, productivity, and efficiency in output; material living standards for consumers; and job satisfaction and advancement opportunities for work­ers. In addition, the latitude to express individual preferences will be con­sidered in an attempt to appreciate the global changes in Russian life brought about by the political and economic revolution that occurred after 1917.

Economic Growth Central Planning

Many students believe that an economy's rate of growth is an unambiguous fact that is beyond dispute. They are surprised to learn that there is a con­siderable discrepancy between various measures of Soviet economic per­formance since 1917; they are even more surprised to learn that several "right" answers can be derived from similar data, depending on which basis for comparison is selected. If an economy produced only a single homoge­neous commodity, a reasonable physical measure could be found to keep track of the tons, yards, or dozens turned out; with a variety of products, however, a monetary standard is needed—adding tons of coal and tons of diamonds certainly distorts the value of carbon products.

Relative prices vary over time; thus, the core of the "index-number problem" is the discrepancy between measured growth rates depending on the base-year prices selected as a standard. Early-year weights give high price weights to new products that are growing rapidly; late-year weights give low price weights to the same products. In the Soviet Union, during periods of extremely rapid growth, this gives rise to extreme variations; one reputable estimate shows only 4.8 percent average annual growth be­tween 1928 and 1937, if 1937 prices are used as weights, but an 11.9 per­cent rate if 1928 prices are used instead.

Whatever the exact measure, it is undeniable that a rapid increase in output (especially industrial output) occurred during the first two five-year plans. The growth rate fell, however, during the Stalinist purges of the late 1930s and fell still further before and during World War II. Cohn's figures show a 7.1 percent annual growth rate for 1950-1958 and a slower pace of 5.5 percent for 1958-1967. Estimates for later years are provisional, but there is evidence that the 6.7 percent planned rate of increase for the 1971-1975 period is probably on the optimistic side.

To find rates of sustained growth in the capitalist world one must go back to historical instances such as the U.S. in the 1870s and 1880s, Australia in the 1860s and 1870s and Japan in the 1920s and 1930s. Even those growth rates are only on the order of 5 or 5.5 percent. Taking into account the fact that the U.S.S.R.'s growth was set back severely by World War II and that its average annual rate for the 38-year period since 1928 nevertheless ranges between 5.4 and 6.7 percent, the Soviet accomplishment appears to be essentially unprecedented.

How did this impressive accomplishment occur? To help answer that question, we can rely on a simple model disaggregating the sources of eco­nomic growth in the Soviet economy.

Static Efficiency

Economic performance can be judged according to two kinds of efficiency: "static efficiency, or the degree to which a community is able to exploit material opportunities that are open to it within the limits of available technological knowledge, and dynamic efficiency, which relates to the com­munity's capacity to add to its technological knowledge and to exploit such knowledge with increasing effect."6 We will consider the criterion of static efficiency in this section and that of dynamic efficiency in the next one. Efficiency is related to growth, but in some ways it represents a more realistic standard of Soviet economic performance by not assessing fault for factors beyond the control of central planners. Achieving static effi­ciency provides a larger surplus for investment in future productive capac­ity and thus facilitates rapid growth; achieving dynamic efficiency pushes the economy along the highest feasible growth path as limited by resource endowments, labor-force growth, and environmental conditions. Since these vary among nations, the growth rate produced under dynamic-efficiency conditions varies also.

Referring back to our model, the question of the static efficiency of the Soviet economy at any moment becomes the following: Given the exist­ing participation rates and the sectoral allocation of labor, did productivity in each sector achieve the maximum level made possible by existing tech­nology? Previous chapters chronicled the sources of static inefficiency. They can be summarized under three categories—shortcomings of the incentive system, waste at the enterprise level, and obstacles instigated by central planning per se.

The morale problem on collective farms remains unsolved, as does the unwieldy size of farm units and the bureaucratic interference with man­agerial decision making. Although there is an increased commitment of investment funds to agriculture, fundamental administrative reforms of the organizational structure imposed in the 1930s have not occurred. Equally remote is a move toward reliance on the price mechanism as a basic moti­vating device for securing agricultural production. Thus the same forces that precluded static efficiency in agriculture up to now will continue to operate in the future.

Our chapter on industrial planning listed similar difficulties in the industrial and services sectors, with the significant difference that industry was not systematically and deliberately starved of capital the way agricul­ture was. Reforms in the incentive and administrative systems have been attempted in industry, but it is questionable whether they have done much more than keep up with the demands imposed by the increased scope and complexity of centrally planning a mature industrial economy.

It is doubtful, moreover, that the Soviets fully realize the task that confronts them in creating a services sector commensurate with the standard of living they envision for the near future. The quality of consumer-durable goods is notoriously low; there are periodic publicity campaigns in which immediate breakdowns of long-awaited television sets or refrigerators are documented, together with the virtual absence of any means of getting them repaired. The recent decision to embark upon the mass production of auto­mobiles will eventually involve millions of people in related service activi­ties. One does not have to envision a full range of shopping centers and drive-in movies to predict that the automobile will revolutionize Russian living patterns and mobility, and will absorb resources in ways similar to the American experience.

We conclude, therefore, that static inefficiency has been and will con­tinue to be a fact of Russian economic life. Precise measurement of the extent of wasted resources from this source is extremely tenuous, but one bold attempt estimated that if the bundle of resources available in the Soviet Union in 1960 had been utilized with American techniques and organizational skills, a 5 to 20 percent greater output would have resulted.

Dynamic Efficiency

Dynamic efficiency, it will be remembered, refers to an economy's ability to add to its stock of usable technological knowledge. Achieving dynamic efficiency is a two-phase process in a modern economic system: First, a high rate of saving out of current output must take place in order that capital formation can occur; second, a scientific and administrative struc­ture must be created that encourages new technological discoveries to be incorporated into additions to the capital stock.

The ability to achieve high rates of investment has been one of the greatest areas of success for the Soviet economy. Except during World War II, the capital stock has been growing at an average rate of 8 to 9 percent annually since 1928. This rate implies a doubling of the capital stock every eight years. This is about twice the rate achieved by the United States during our period of most rapid economic growth, at the end of the nine­teenth century. On top of this rapid accumulation, the Russians have been able to direct investment toward areas of the economy where the output payoff has been immediate and substantial. Activities with high capital/ output ratios, of which housing is the most blatant example, have been sys­tematically starved to prevent them from absorbing scarce resources while generating relatively little additional output. If this situation is ever re­versed, the implications for future economic growth in Russia are profound.

Dynamic inefficiency thus arises predominantly from how capital is used once it has been allocated to sectoral distinctions. Considerable waste has occurred as a result of the ideological proscription on capital charges as a rationing device for allocating capital. Individual enterprises, more­over, have been understandably reluctant to incorporate new technology into additions to productive capacity.

In the Soviet industrial context, any increases in the degree of dependence of an enterprise on outside organizations increases the risk of plan underfulfillment. The traditional efforts at enterprise "autarky" reflect the aversion to such dependence. The enterprise undertaking an inno­vation, particularly if it is of large scale and if it is the first instance of its introduction in the USSR, becomes heavily dependent on outside R and D [Research and Development] organizations for the supply of vital services.

Despite these drawbacks, the Soviet record of productivity growth in the postwar period is roughly comparable to that of the United States. The difference between the growth rate of total output and that for combined inputs is a composite of organizational improvements, economies of scale, improvements in the quality of labor and capital inputs, and the increasing proficiency resulting from accumulated experience in advance production techniques. One estimate places the annual advance in this measure of "total factor productivity" at 3.9 percent for 1950-1958 and 2.3 percent for 1958-1964. Initial figures for the subsequent period point to the possibility of a dramatic slowing of the recent rate of technical advance in the Soviet Union.

The Soviet record of economic growth has been impressive and in terms of the objectives of Soviet political leaders, which have not rated human welfare very highly, it has been quite successful. Further, we have tried to show that the main impact of Soviet centralized planning on Soviet economic growth has been felt in the ability of the central planners to force structural change in outputs and inputs on the economy. This has been reflected in the more rapid growth of industry and construction relative to total national product and within industry by the relatively more rapid growth of producers' goods in comparison with consumers' goods. And it has been reflected in the rapid increase in the quantity and quality of capital and labor. Finally, we have argued that Soviet central planners were not so effective in fostering growth in the realm of micro resource allocation, that is, they were not too successful in getting the economy in a given year with its given resources to produce an output close to its potential maximum. How­ever, we have also argued that they have been relatively successful in achieving dynamic efficiency. The growth of outputs per unit of aggregate inputs in the Soviet economy has generally been equal to that of the leading capitalist economies.

The continued accuracy of this summary evaluation hinges on the two sources of dynamic efficiency. As the rate of capital formation reaches the limits to which it can be pushed, given present needs on the consumer front, there must be a corresponding increase in both the supply of tech­nical innovations within the Soviet Union or borrowed from abroad and the receptivity of establishments to adopt such innovations because ade­quate incentives exist for doing so. It is clear that neither can Soviet central planning achieve this necessary transformation nor does sufficient flexibility exist for institutional adaptation to the ending of growth primarily through structural shifts and a high rate of capital formation. No one can predict the final outcome of the forces that have been set in inexorable motion.