Slowdown for the Soviets

Hardly had Nikita Khrushchev's bluster about Russia's strength died in Washington than a sobersided report showed that the Soviet economy lags much farther behind the U.S.'s than any Russian politico cares to admit. The report, written by top British Economist Alec Nove, 42, and published this week by the nongovernmental National Planning Association, puts forth new evidence that the U.S.S.R. has no chance to match the economic level of the U.S. in the foreseeable future. Economist Nove flatly rejects Khrushchev's boast that the Soviets have boosted their industrial output to more than half the U.S. level. That claim, says Nove, who was born in Russia, is "based on an absurdly inadequate commodity sample." He figures that "40% is possible," but one-third of the U.S. level is closer to the truth.

Declining Rates. Largely because the Soviets operate from a lower base, the Soviet economy is growing faster than the U.S. economy. Another key reason for the Soviet growth--about 8% a year, v. 4% for the U.S., since World War II--is that the Soviets have neglected the consumer needs of their citizens. But now a major change is on the way, and the growth rate is on the wane. Going out is crude coercion of the worker; coming in is personal incentive. This shift, says Nove, requires a major diversion of Soviet resources to the nongrowth sectors that the Kremlin ignored for so long.

These advances have come at the expense of fast growth. For the next seven years Nove sees annual rises of 4% in Soviet agriculture, 6% in national income, 7% to 8% in industrial production. Though still impressive, these totals are nowhere near enough to equal the U.S. in gross national product.

Diminishing Returns. What the Soviet Union faces is a period of diminishing returns that other industrial nations have usually experienced after a major growth spurt. Many of the Soviets' methods and machines were pirated straight from the West, and they sparked the spurt; now they are aging, and the rate of growth is bound to go down. Furthermore, in the days of breakneck drive for growth in the '20s and '30s, writes Nove, "Iron ore or coal mines were 'creamed,' the best and most easily accessible mineral being taken as quickly as possible. The virgin lands campaign was launched with little consideration for the long-term problem of soil conservation. [There was] ruthless cutting of trees in the most accessible areas."

Dropping Reserves. Some raw materials are running low. Coking coal, for example, is scarce and sometimes must be hauled 1,000 miles to steel mills. "Many of the vital minerals are to be found in areas lacking transportation facilities, and remote from centers of industry and population. This requires very long hauls and is quite uneconomic." Even the labor supply, one of the Soviets' strongest resources in the past, is running short. Not only are fewer young Russians entering the labor force (because of the wartime slump in birth rates), but they will have to do more work in less time. The regime has promised to cut the work week from 46 hours to 42 next year, to 40 hours in 1962. Nove predicts one key result of this decline in industrial growth and the rise in consumer demand: the Soviets in the future will be obliged to devote more of their product to home use, less to export. Says Nove: "There is little likelihood of a devastating, all-out trade and aid drive by the Soviet bloc."

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