chapter  4
17 Pages

The question of 'Investment-priority for heavy industry'

So-called investment-priority for heavy industry has come to be regarded, in discussing policies of development, as a leading characteristic of Soviet industrialisation. This and the coupling of rapid industrialisation with collectivisation of agriculture are generally treated as composing the hallmark of the specifically Soviet mode of development. As such it has been counterposed to the traditional process which Professor Rostow christened 'textiles first'; and as a deviation from the traditional method it has been commonly denounced in the past by economists in Western Europe and America as an uneconomic and humanly wasteful way of attaining its postulated goal. In underdeveloped countries, faced with the problem of either launching or sustaining the momentum of an industrial revolution, its economic rationale has been more frequently appreciated; and in the last ten or fifteen years discussion has shifted to the general applicability of this method to underdeveloped countries and whether or not it can be regarded as a general condition for achieving a high rate of growth. Certainly in Paul Baran's treatment of economic development and its problems

in his influential work, The Political Economy of Gtowth (New York: Monthly Review Press, 1957), this 'heterodox' principle is virtually treated as an axiom of rapid economic growth. This is how the matter is epitomised:

Large investment in producers' goods industries is tantamount to high rates of growth sustained during the entire planning period, and correspondingly a program directed towards economic development via consumers' goods industries implies automatically not only smaller initial investment but also much lower rates of ensuing growth. (Ibid., p. 284.)

Firstly to say something of the historical background of this precept. There are two reasons in particular why this is a peculiarly Marxian notion (at least in the sense of something that comes naturally to mind to one using Marxian categories of thought). In the first place it is a fairly obvious application of Marx's famous two-departmental schema in the second volume of Das Kapital. Secondly, Lenin had advanced the view, in the course of his controversy with the Narodniks, that Capitalism had developed the production of means of production faster than that of means of consumption: that this had, indeed, been an essential part of Capitalism's 'historic mission'-'production for the sake of production'.1 If this had been done by Capitalism, then it surely seemed to follow for any Marxist that this must a fortiori be the aim of a socialist economy, especially in the situation in which the Soviet Union found herself in the 1920'S. In the economic controversies of that decade about how to build socialism in a backward country that was predominantly agricultural and had a weakly-developed heavy industry, this way of presenting the problem had already become familiar. Theorists of the Rightwing, like Shanin of the Commissariat of Finance, had explicitly talked about a necessary sequence of development, consisting first of agriculture, secondly of light industry mainly in response to the demands of the village market, and thirdly and lastly of heavy industry as and when the growth of agriculture and light industry

had brought in their train a sufficient expansion in the demand for capital goods. On the other hand, the so-called 'Left Opposition' of the time consistently complained of the relative backwardness of heavy industry (which in the process of reconstruction after the war and civil war had recovered its prewar position considerably less well than other branches of industry). When critics of Preobrazhensky's policy of laying the main burden of financing industrialisation upon the peasantry argued that such a policy, by narrowing the peasant market for industrial products, must inevitably retard the growth of industry, Preobrazhensky retorted that the lead in the process of industrialisation would be taken by heavy industry which would supply a demand generated in the process of its own expansion-serve a market internal to itself. When the First Five-Year Plan eventually came to be formulated, the notion of investment in heavy industry as leading the process of development, instead of passively following it, was firmly established as the fulcrum of economic strategy.