G. Warren Nutter

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National Bureau
of Economic Research
Volume Title: Some Observations on Soviet Industrial Growth
Volume Author/Editor: G. Warren Nutter
Volume Publisher: UMI
Volume ISBN: 0-87014-369-7
Volume URL: http://www.nber.org/books/nutt57-1
Publication Date: 1957
Chapter Title: chapter 3
Chapter Author: G. Warren Nutter
Chapter URL: http://www.nber.org/chapters/c2678
Chapter pages in book: (p. 7 - 11)624 AMERICAN ECONOMIC ASSOCIATION
have tended in recent years to gain ground in terms of total output, they
have continued to lose ground in terms of per capita output.
To anticipate questions that must have arisen in the minds of many,
let me say right away that this has been a recital of the raw historical
record for the Soviet era as a whole, which cannot serve in itself as an
adequate guide to future performance. Bad years of growth—e.g., 19 13-
28—have been indiscriminately mixed with good, and the conditions
producing those bad years may never recur with the same intensity.
Such analysis has the same faults as focusing solely on the best years
of growth; here, too, there were many peculiarities not likely to persist
over the long term. A proper appraisal of underlying trends requires
that attention be paid to both short and long periods. But we can attend
to only one thing at a time, and the essential purpose of this brief
paper is to bring the picture of growth trends into focus by looking at
long-range performance. Needless to say, the study now under way at
the National Bureau will give much more detailed attention to the
problems mentioned here.
While digressing on qualifications, itis worth pointing out that
Soviet products seem to be generally inferior in quality to their Ameri-
can counterparts, even to those produced many years earlier. More-
over, quality seems to have deteriorated in many industries over at
least parts of the Soviet era. The inferiority and deterioration are most
marked for consumer goods, but they also hold for many industrial
materials. -It has not been possible to make allowance for these factors,
and hence the lags and their changes are biased in favor of the Soviet
Union. This matter is apart from the question of how reliable Soviet
data are on the quantitative side, quality ignored. On that score, it
hardly seems likely that Soviet authorities have practiced the art of
understatement in heralding their achievements.
III
Let us now return to the main theme and examine more closely the
suggestion that industrial development in the Soviet era, unadjusted
for population, is similar to, though slower than, our own during the
period This inference has been drawn from an analysis that
was not confined to a single period of growth in the United States. On
the contrary, about half the comparisons between Soviet and American
industries involved American periods ending earlier than 1920 and the
other half involved periods ending later. Hence there has been some
picking and choosing among different periods in American industrial
'It would be interesting to go into the question of comparable periods of industrial
development on a per capita basis, but this would take us back to a period in American
history where data on production are too meager to support a careful study.SOVIET /Ec0N0MIc DEVELOPMENTS 625
history in order to obtain levels of American output equal to those of
Soviet output, and the picture might not look the same if attention
were confined to 1880-1920 alone.
Suppose we compute growth rates for that period for as many
American industries as possible and compare them with Soviet rates
for 1913-55 (see Table 3). We see that in 22 out of 31 industries
growth was significantly more rapid in the United States than it has
been in the Soviet Union. This does not on the face of it contradict the
conclusion drawn from study of lags.
Of course, even ifit were true that the growth rate for every
industry were higher in the United States than in the Soviet Union, it
would still be possible that an over-all weighted index of growth would
be lower. This could come about if the Soviet rates for some industries
were higher than the American rates for others, and if there were a
sufficiently strong positive correlation between Soviet rates, on the one
hand, and the ratios of Soviet to American weights, on the other. In
fact, the Soviet rates are not even all lower industry by industry, and
therefore the only relevant question is the correlation. The only way to
find an answer is to make weighted indexes, and this should certainly be
done. It is worth pointing out, however, that there is a very strong
negative correlation between Soviet growth rates and the industry-by-
industry ratios of Soviet to American output, the latter taken for the
year 1913 (see Table 3). It would therefore seem unlikely that there
would be a strong positive correlation between Soviet growth rates
and any sensible relative weights one might choose.
Let us then accept tentatively the conclusion that industrial growth
over the Soviet era has proceeded at a pace not any higher than that
for the United States from 1880 through 1920. What else might this
imply? The pertinent issue here is whether American industrial growth
has tended to slow down over t.he long term. If there has in fact been
such a retardation, it has not left an unambiguous imprint in
theGreat Depression of the thirties
• brought about a sharp fall in the growth rate for the years bracketing
it, but recent trends would suggest that this was a cyclical, not a secular,
phenomenon. In any event, few economists who have studied American
industrial growth find adequate evidence of a significant and steady
retardation in the rate of industrial growth as conventionally measured.
If such over-all retardation has not taken place and if Soviet industry
has not grown faster than our own grew from 1880 through 1920, it
would then seem reasonable to suppose that it has not grown faster
than ours over a more recent period—say, the last forty years, or the
Soviet era itself:
This conjecture is puzzling, indeed, in the light of what one observes626 AMERICAN ECONOMIC ASSOCIATION
TABLE 3
GROWTH RATES IN THE SOVIET UNION AND UNITED STATES, 31 INDUSTRIES
(Per cent)
Iron ore
AVERAGE ANNuAL GROWTH RATE4 Ratio of Soviet
to U.S. Output Soviet Union United States
1880—1913k1913—551880—19201913—55 1913 1955
7.1 5.0 5.8 1.4 16 71
Pigiron
Steel ingots
Rolledsteel
7.3
8.7
5.0
5.8
5.5
5.9
9.1
6.6
1.9
2.7
2.7
14
13
15
.52
47
48
Primaryblistercopper....
Lead
7.3
0.9
6.0
13.7
7.6
4.9
0.8
1.2
5
0.3
42
38
Zinc 4.6 11.1 7.8 2.0 0.7 22
Electric power
Coal. .
Coke
7.5
11 .2
6.4
5.6
34.1
5.1
6.9
7.6
—0.3
1.2
7
6
11
30
92
67
Crude petroleum
Natural gas
Sodaash
10.4
17.0
5.0
13.9
5.4
8.1
15.5
10.3
5.6
6.8
4.4
27
0.2
20
22
3
33
Mineral fertilizer 11.6 6.4 5.6 3 34
Paper
Sawn wood
Cement
5.5
3.9
6.6
5.8
1,5
10.3
2.9
—0.2
3.0
6
14
11
15
79
47
Window glass
Railroad passenger cars...
Railroad freight cars
Butter
3.5
1.2
3.1
3.6
3.8
3.8
5.3
7.6
2.0
—3 .5
—2 .0
1.6
60
38
8
31
106
271
63
72
Vegetable oils
Fish catch
2.2
2.4
8.9
0.7
3.1
2.0
77
108
43
129
Soap
Sugar
Canned food
.
5.6
3.5
2.0
8.8
4.0
8.1
6.2
—0.8
1.7
4.5
1.5
73
2
73
83
16
Beer 2.0 1.6 0.9 11 17
Cigarettes
Cotton fabrics 4.7
.5.6
2.0
12.1
3.6
8.0
1.4
125
35
50
46
Silk and synthetic fabrics.
Woolenand worsted fabrics
5.7
2. 1
7.5
1 .3
5.8
—0.3
18
30
21
81
* Geometricmean of the ratio of output for terminal years, minus one. U.S. output taken
wherever possible as centered nine-year moving average.
t For blank spaces, adequate data not found. Output covers Czarist territory excluding
Finland.
when he compares concurrent Soviet and American growth rates for
individual industries. The Soviet rates are almost all higher by consider-
able amount (see Table 3). The key to the puzzle may well lie in the
fact that this is, as already mentioned, essentially a comparison of
young Soviet industries with mature American ones; and, although
there is no easily discernible retardation in over-all American indus-
trial growth, there certainly is as a general rule—in the Soviet Union
as well as the United States—unmistakable retardation in growth of
individual industries as they get older and larger (see Table 3 for some
evidence). If I may use an imperfect analogy, each son will ultimately
catch up to. his father in height, and brothers of different age will differ
less and less in height as they get older. A whole population, on theSOVIET ECONOMIC DEVELOPMENTS 627
other hand, may maintain a quite stable average height or rate of in-
crease in average height. As far as industrial growth is concerned, the
point is that attention must be given to both new and old industries,
to ones being born and ones dying, and in every case to the weights it
seems proper to attach.
Let me illustrate these issues by returning to the specific example
of steel ingots. For the period 1913-55, Soviet output grew at an annual
rate of 5.8 per cent (based on data for terminal years), while American
output grew at only 2.7 per cent. As -a result, Soviet output rose from
about an eighth of American output at the beginning of the period to
almost a half at the end. The significance of this development from the
point of view of industrial growth is, however, not as clear as it might
seem; for, as we noted earlier, it was about 30 years ago when Ameri-
can output reached half its present level, but it was only about 20 years
before 1913 when it reached an eighth of its level at that time. That
is to say, it took only 20 years for American output to multiply eight
times up to its level of 1913, but it took almost 30 years for it to double
up tO its level of 1955. In terms of annual rates, American output grew
at 9.1 per cent from 1880 through 1920, but at only 2.7 per cent from
1913 through 1955. It is quite possible, in view of the great efforts
being put into steel production in the Soviet Union, that retardation
in growth will not be as marked there as it has been in the United
States. But the history of the Soviet steel industry certainly implies
that there will be some retardation. The following comparisons of
Soviet annual growth rates for the output of steel ingots are informa-
tive: 1880-1913, 8.7 per cent, compared with 1913-55, 5.8 per cent;
1928-3 7, 17.2 per cent, compared with 1948-55, 13.6 per cent.
I do not wish to argue that there is no significance in the tendency
for certain Soviet industries to approach their American counterparts
more and more closely in size. Quite to the contrary, it is easy to think
of several important problems for which this is a very important con-
sideration, and any study of Soviet industrial growth would be seri-
ously incomplete without explicitly revealing this widespread phe-
nomenon. The only point being m'àde is that this type of analysis is
not adequate for assessing "general" industrial development. The con-
cept of industrial growth must somehow take account of expansion
in breadth as well as length. Paying attention solely to a fixed list of
industrial products—especially to a list supplied by Soviet authorities
—is a deficient approach, even if some method is used to weight prod-
ucts by importance.4 This point may be underscored by observing
The essential point to keep in mind here is the austere nature of Soviet industry in
contrast to American industry. American growth has taken place in large part through
proliferation of commodities designed for similar functions, through improvements in
quality, and through addition of new services, both directly and as embodied in improved
commodities. Soviet growth has taken place mainly through expanded output of standard628 AMERICAN ECONOMIC ASSOCIATION
that the decline of some industries in the United States—as coal; soap,
and railway equipment—is in a real sense a sign of progress: the sup-
planting of worse by better means of doing the job. Are, then, gains by
the Soviet Union on the United States in output of coal, for instance,
to be viewed as indicating more rapid industrial advance?
Iv
Even in a discussion as incomplete as this one admittedly has been,
it would be improper to conclude without emphasizing once again that
we have been looking, from a few restricted points of view, at the
record of industrial achievement posted by the Soviet Union over the
entire period of its existence. The years under review include the two
world wars, a violent revolution, and a severe civil war—altogether
some eleven years of turbulence, a fourth of the period. They also
cover experience under both a planned and an. economy,
and these in turn have had disturbances of a severity that may not be
encountered again. There are obviously questions raised about how
trends are to be interpreted over times such as these.
At a minimum, account must be taken of the best years of growth,
which come down essentially to the periods 1928-3 7 and 1948-55.
These short spurts of growth have, of course, been much more rapid
than growth over the Soviet period as a whole. As -already mentioned,
there are good reasons for doubting that the performance in these short
periods can be sustained over the long haul. A number of unique cir-
cumstances that favored rapid expansion are not likely to be encoun-
tered again—including, for instance, the absorption of a vast idle labor
force and the sudden inheritance of Western technology. However this
might be, any judgment of Soviet industrial development should give
all due weight to performance under the best of conditions.5
products. This is, of course, an oversimplification, but it serves well enough here to point
up a significant difference. As a few specific examples of the austere- path of Soviet de-
velopment, one might note the persistently limited varieties of textiles, the retention of
basic tractor models for .two to three decades, and the slow progress made in packaging
consumer products. When one leaves the realm of "industry," the contrast is sharpened.
Nothing remotely similar to the expansion of service trades in this country has taken place
in the Soviet Union. It is perhaps well to stress that these remarks are directed to the
question of "general" industrial development, not to performance in special areas. In par-
ticular, nothing that has been said is inconsistent with Soviet successes in developing new
and increasingly deadly weapons of war, and in producing them in large quantity.
It is difficult to understand the argument that only the recent years of growth are of
any interest;i.e., that long-range performance is irrelevant for assessing growth trends.
However, in view of comments on this paper by Professor Grossman, it may be well to
indicate the general behavior of lags with 1928 as a bench mark year. For total output,
the median lag was 28 years in 1913, 45 years in 1928, and 34 years in 1955; the median
change in lags was an increase of 15 years for 1913-28 (based on data for 31 industries)
and a decrease of 9 years for 1928-55 (based on data for 32 industries). For per capita
output, the median change in lags was an increase of 15 years for 1913-28 (based on data
for 17 industries) and an increase of 0 years for 1928-55 (based on data for 24 industries).
That is to say, of the 24 industries for which changes in per capita lags can be computed
over the period 1928-55, haIl showed an increase and half a decrease. -

Some Observations on Soviet Industrial Growth

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