Policy of Economies

(policy of thrift), a system of forms and methods for the planned reduction of the expenditure of economic resources, relative to the useful result obtained; one of the most important means for improving the economic efficiency of production. When a policy of economies is pursued, economic practice takes into account the effects of the general economic law of saving labor time, the law of the growth of labor productivity, and so forth. A reduction in expenditures per unit of useful effect (proportional expenditures) corresponds to the principles of a policy of economies. A scientifically based and developed policy of economies relies not only on the simplest types of economies but also on extensive economic maneuvers. The result is an absolute increase in expenditures (and temporarily, perhaps, a relative [proportional] increase in the cost of the useful effect). The purpose is ultimately to achieve a substantial, permanent decline in the proportional expenditures.

Under the conditions of private property, the competitive struggle and the capitalist’s endeavors to increase the rate of profit lead to the rationalization of resource utilization, which is accompanied by crisis phenomena and the plundering of natural resources and the labor force. A capitalist society pays for the growth of profits and the reduction in outlays in individual links of the economy by losing a portion of its own resources (seeCOMMERCIAL ACCOUNTING). Under public ownership the policy of economies becomes a means for improving production efficiency in separate links and spheres of the economy, as well as in the national economy as a whole. A number of factors are of decisive significance for minimizing expenditures under socialism: the methods of centralized, planned maintenance of national economic proportionality, which provide for prompt changes in the structure of economic reproduction; universality of labor; rational utilization of natural resources; a high degree of correspondence between production and consumption; and a scientific foundation for the shaping of the structure of consumption.

The policy of economies is based on the principles of democratic centralism. Consequently, its methods combine discipline with initiative, central directives with independence, and strict subordination of economic actions with broad opportunities for initiative. The policy of economies is implemented in all links of a socialist economy in the form of economic accountability, and in all spheres of the economy in the form of the planned regulation of economic processes.

The specific methods for carrying out a policy of economies at the level of the economic link include the introduction of norms for outlays of labor and material and financial resources, state regulation of the use of natural resources, the release and rational use of the labor force, and the introduction of socialist emulation to raise labor productivity. Other concrete measures in all links of the economy include the saving of raw materials, other materials, fuel, and electric power; better utilization of equipment; and improvements in product quality. In a socialist society the fundamental interests of the workers are served by a policy of economies, because it results in improved efficiency, which creates additional sources for economic development, for increasing national prosperity, and for solving other problems of socioeconomic progress.

A policy of economies helps to instill in the workers high moral qualities that conform to the moral code of the builder of communism. Among these qualities are a conscientious attitude toward work, concern for preserving and increasing social wealth, comradely mutual aid, and intolerance of parasitism and acquisitiveness.

A policy of economies is an objective economic pattern, but there are inevitably changes in the specific historical forms and methods of a planned minimization of the proportional expenditures of resources. Economic reforms in the USSR and the other socialist countries have strengthened the effect of the policy of economies.