In last week's column, the figure for the increase in Soviet industrial production planned for the years 1976-80 should have been 36 percent, not 32 percent.
The "metal-eaters," one of the most influential groups in the Soviet power structure, are in trouble. They were given that name by Nikita Khrushchev when, as Soviet premier, he was doing battle against the Soviet military-industrial complex. Since his fall the metal-eaters have managed to increase consistently the production of steel, but the Soviet economy is now in such deep trouble that even the steel industry, which usually has the highest priority, is not receiving the resources it needs.
Its failure to reach the target for last year, just disclosed by Moscow, is part of the much broader failure of a number of key Soviet industries to perform as the planners had expected. Last year was the second of the current five-year plan, and in some ways it was decisive. The results for the first year, following a disastrous harvest, were far below the original target. It was the second year that was to begin the economic recovery that would have helped to make up in later years the leeway lost at the outset. Instead, the opposite is happening.
Some analysts are beginning to ask whether the Soviet position in the world, and even the stability of the Soviet regime, might not be endangered by the strains and stresses now emerging in the economy. On present evidence say such concern would be premature, but if the trend continues and the economic situation deteriorates, then the political consequences could indeed be far reaching. The Soviet economy has to grapple with deep-seated, structural problems. The mere tinkering of recent years could do nothing to resolve them.
When the current five-year plan was announced, the Kremlin had scaled down drastically the previous high growth targets. It had failed to meet the targets for 1971-75, and instead of reaching out once again for the higher figures in 1976-80 - which would have put a considerable strain on the economy - it settled for slower growth and a lower growth target. Even some of the most skeptical Western observers, such as the CIA, found the new plan to be "unusually restrained and realistic." But it is now clear that even this reduced plan is out of control. It cannot be fulfilled.
The Kremlin has given no identification so far that it is prepared to face the issue honestly, admit the failure to the nation and announce a revised five-year plan, but the figures are beyond dispute. Industrial production was to increase in 1976-80 by 32 percent, which works out at an average annual increase of 6.5 percent. But in 1976 the increase was only 4.8 percent, in 1977 it was 5.7 percent, and the new plan for 1978 calls for no more than 4.5 per cent. This leaves a target of nearly 8.5 percent to be reached in each of the remaining two years if the original 32 percent is to be attained during the whole five-year period - and this is quite outside the realms of economic possibility.
The political strains this will impose on the leadership can only be imagined. The most important political decisions in the Soviet Union, as indeed elsewhere, have to do with the allocation of scarce resources among competing claimants. But the more slowly the economy grows, the smaller is the price available for cutting up - and the more acute the conflict between the groups that insist on retaining or increasing their own piece of the pie.
Some of the problems that this is causing are already evident. The claims on the nation's resources presented by the defense sector, by agriculture, by the costumers - all have a good political rationale behind them, from the Kremlin's point of view.
The defense buildup is necessary, its supporters would argue, if the Soviet Union is to be able to negotiate from strength a fair arms-limitation agreement with the United States. Money must continue to be poured into the development of agriculture if the country is to become self-sufficient in food, instead of having to rely on U.S. grain imports, whichmight expose it to political blackmail. The consumers must see a constant rise in the standard of living if they are to acquiesce in a political system that claims their allegiance in return for promises of material benefits.
The Kremlin has made great efforts in the past few years - with varying degrees of success - to meet the demands of the three sectors, because the political risks of ignoring their claims would have been too great. But the fourth claimant is not doing so well. Capital investment for industry, the seed money on which future increases in production depend, is not now flowing into the economy rapid the high rates of growth in the future. One reason why the steel-production target that should have been reached last year will be reached only at the end of this year is that much of the new production capacity and equipment promised to the steel industry failed to materialize.
The military probably got most of the steel they wanted - though even the metal-eaters must have had to tighten their belts a little - but this would mean that many other industries had to make do with less. Their failure to get the steel they need would slow down the growth of the rest of the economy, and this in turn would further limit the resources available for investment. So would the failure of other key industries to meet their targets during the year just ended also contribute to the slowdown. Soviet economic planners are caught in a vicious circle - and so are Soviet political leaders.