The 1957 Economic Reform in the Soviet Union () was a reform of national economic management carried out in 1957–1965. It was characterized by the replacement of the centralized sectoral management system, which had been used since the mid-1930s, with a decentralized, territorially distributed system, which in Soviet literature was called the "territorial principle management system".Постановление ЦК КПСС и Совета министров СССР от 30 сентября 1965 No. 728. Об улучшении управления промышленностью It is associated with First Secretary of the Central Committee of the CPSU and (since 1958) Chairman of the Council of Ministers of the Soviet Union, Nikita Khrushchev.
The reform consisted of dividing the territory of the Soviet Union into so-called "economic administrative regions"Краткая географическая энциклопедия / гл. ред. А. А. Григорьев. М.: Советская энциклопедия, 1962. Т. 3. with the creation of a network of territorial economic councils within the regions, territories, and republics of the Soviet Union, to whose jurisdiction enterprises previously subordinate to industrial and agro-industrial ministries were transferred. According to the initiators of the reform, decentralization of the production management system would increase its growth, improve product quality, optimize resource distribution, reduce equipment repair costs, and improve the organization of material and technical supplies.
However, the short period of decentralization in the first years of the reform, aimed at breaking the rigidly centralized sectoral management system that had been in place since the mid-1930s, led to the destruction of a unified technical policy and the disintegration of economic ties in industry and agriculture. An attempt to rectify the situation by consolidating economic councils and merging administrative economic regions led to the emergence of intermediate levels of management in the form of republican and union councils of the national economy and sectoral state committees. Research, design, and engineering organizations that were under the jurisdiction of sectoral management bodies were cut off from industrial enterprises, which continued to be subordinate to territorial bodies. This led to a decrease in the quality of design, construction and reconstruction of enterprises, slowed down the introduction of new technologies, machines and equipment and, as a result, led to a decrease in the quality of industrial products.
Nevertheless, this reform led to significant economic growth. The transformation of the industrial management system from sectoral to territorial and the evolution of the latter into a hybrid "production-territorial" system could not eliminate the fundamental contradiction between the historically established system of vertical integration of production in industries and the attempt to manage industries on a territorial principle.
The problems of the Soviet economy continued to worsen, and by 1965 the trend towards centralization prevailed. As part of the 1965 Soviet economic reform, the economic councils were liquidated, and the territorially distributed system of economic management through economic councils was replaced by a rigidly centralized sectoral management system through sectoral ministries and inter-sectoral state committees that composed the Council of Ministers of the Soviet Union, which was familiar to the party and economic nomenklatura.
History Initiation of reform After the death of Joseph Stalin in 1953, the leaders of the country and the party took a course on developing socially oriented sectors of the economy - construction, agriculture, light industry and production of consumer goods. However, by 1955, the course on the preferential development of consumer goods production was rejected in favour of the accelerated development of heavy industry. At the 20th Congress of the CPSU in 1956, a program for the formation of a single national economic complex of the Soviet Union was adopted. The implementation of the program was to ensure continuous technical progress, rapid growth in labour productivity, the development of strategically important industries and, as a result, an increase in the standard of living of the Soviet people, which was to bring the Soviet Union to first place in the world and demonstrate the superiority of the socialist economy over the capitalist one.
At the end of January 1957, a note from the First Secretary of the CPSU Central Committee Nikita Khrushchev on improving the management of industry and construction was sent to a wide circle of country leaders for discussion. The essence of the note was a proposal to abolish departmental subordination of enterprises and transfer them to the regions. Industry ministries were to be liquidated as unnecessary. It was assumed that such a reorganization would significantly increase the growth of industrial production, improve the quality of manufactured products, resources would be distributed more rationally, and the problems that the Soviet economy faced would be solved more quickly. One of the reasons for the appearance of the note on the need to decentralize management was the growing budget deficit of the Soviet Union: to cover foreign currency expenses, it was necessary to sell more and more gold abroad. The ideological background of decentralization was Khrushchev's desire to create a "people's state" in which the broad masses of workers would be involved in all spheres of management, including production, where this course was expressed in the decentralization and de-bureaucratization of the country's economy. According to Khrushchev, the existing centralization of management gave rise to "a number of abnormal phenomena", preventing society "from coming to a communist society, having such an excessively centralized system of economic management".
At the plenum of the Central Committee of the CPSU, which was held in February 1957, a discussion was held on the reform of the economic management system. Khrushchev's proposal was supported by the First Secretary of the Central Committee of the Communist Party of Uzbekistan, Nuritdin Mukhitdinov, the Chairman of the Council of Ministers of the Ukrainian SSR, Nikifor Kalchenko, the First Secretary of the Leningrad Regional Party Committee, Frol Kozlov, the Secretary of the Moscow Regional Party Committee ; against were the First Deputy Chairman of the Council of Ministers of the Soviet Union Mikhail Pervukhin, the Minister of State Control Vyacheslav Molotov, the Chairman of the Presidium of the Supreme Soviet of the Soviet Union Kliment Voroshilov, the First Secretary of the Central Committee of the Communist Party of Ukraine Petro Shelest, the Chairman of the State Planning Committee of the Soviet Union Nikolai Baibakov and his First Deputy Alexey Kosygin.Алексей Гвишиани: «Не надо жалеть Косыгина!» // Правда.ру However, Khrushchev's opinion prevailed, and at the session of the Supreme Soviet of the Soviet Union that followed the party plenum, a resolution was unanimously adopted on the creation of local councils of the national economy (sovnarkhozy, SNKH).
Decentralization period (1957-1962) Before the reform, industry and construction were managed by sectoral ministries, which in 1957 were responsible for over 200,000 enterprises. The beginning of the reform was marked by the abolition of 25 of the 37 union and union-republican ministries for industry and construction, and the transfer of the enterprises under their control to the direct subordination of economic councils. The remaining ministries retained the "functions of planning the relevant branches of industry and ensuring a high technical level in the development of production". The same reorganization was carried out at the level of the republics of the Soviet Union. The State Commission of the Council of Ministers of the Soviet Union for Long-Term Planning of the National Economy was transformed into the State Planning Committee (Gosplan); in place of the abolished State Committee of the Council of Ministers of the Soviet Union for New Technology (Gostechnika), the State Scientific and Technical Committee of the Council of Ministers of the Soviet Union was formed.О дальнейшем совершенствовании организации управления промышленностью и строительством: Закон от 10 мая 1957 г. // Ведомости Верховного Совета СССР, 1957 г., No. 11 To implement the reform, 105 administrative economic regions were created in the Soviet Union, 70 of which were in the RSFSR. Each such region had a national economy council with its own sectoral and functional departments and divisions, where economic management issues were resolved in relation to the given economic administrative region depending on its specialization. In March 1958, Khrushchev, while remaining the leader of the party, also took the post of head of the Soviet government, which, in the opinion of the country's leadership, should have contributed to the promotion of the reform of national economic management. Decentralization of industrial management made it possible for the first time in Soviet public administration practice to bring management bodies as close as possible to the lowest management objects - industrial enterprises. Thanks to this, the processes of planning, coordination, supply, construction, etc. were significantly accelerated. The possibilities for inter-industry cooperation within the boundaries of a single administrative economic region expanded, which created the prerequisites for the formation of complex territorial production systems on the territory of economic regions. At the same time, the territorial approach to industrial management led to the disruption of established economic and production links between enterprises in the same industry, since as a result of the reform the enterprises found themselves in different administrative economic regions and were subordinated to different economic councils. Problems associated with the uneven regional economic development of the country also emerged. For example, the northwestern and central regions of the RSFSR had a much more developed industrial base - especially in the field of shipbuilding, instrument making, automobile manufacturing, machine tool manufacturing, electrical engineering, electronics, construction materials production, light and chemical industriesСССР. Экономические районы — статья из Большой советской энциклопедии - and qualified personnel, including management, than the Central Asian regions of the Soviet Union, whose economies were dominated by agriculture. For this reason, less economically developed regions were doomed to chronically lag in the development of their territorial production complexes.
The first stage of the reform was accompanied by propaganda campaigns and slogans. In January 1959, at the 21st Congress of the CPSU, the "complete and final" victory of socialism in the Soviet union was declared and a for the development of the national economy for 1959-65 was approved. The plan envisaged "catching up with and overtaking" the capitalist countries and bringing the Soviet economy to first place in the world in terms of production per capita. At the 22nd Congress of the CPSU, held in October 1961, a new, Third Program of the CPSU was presented - a program for building a communist society in the Soviet Union. In the area of economics, the program called for creating the material and technical base of communism within ten years (1961–71) through the electrification of the country, comprehensive mechanization and mass automation of production. It was supposed to increase the volume of industrial production by 6 times within 20 years, to double labour productivity within 10 years, and to double the level of labour productivity in the United States within 20 years.
The Centralization Period (1962-1964)