Socialist State Production Enterprise

the basic unit of the Soviet economy, a relatively independent unit of economic production functioning on the basis of the state economic plan. Its activity rests on centralized leadership and economic independence and initiative. The enterprise makes use of state property, which is placed either under its operational management or at its disposal but which constitutes part of the single fund of state socialist property.

Under the direction of a higher agency the work force of the socialist state production enterprise carries out such economically productive activities as the manufacture of goods, the fulfillment of tasks, and the provision of services on the basis of economic accountability (khozraschet). For these purposes the enterprise recruits workers, acquires machinery, raw materials, and other materials, organizes the production process, sells its finished products, keeps its fixed capital stock in good repair, and maintains a complete system of accounting and reporting that shows the results of its economic activity in terms of profit and loss. An economically accountable socialist state production enterprise has its own name, stamp, and trademark, an independent budget, and its own settlement account (raschetnyi schet) with the State Bank of the USSR (Gosbank).

The enterprise is liable for its obligations and may be a plaintiff or defendant in a court or arbitration tribunal, that is, it is regarded as a subject of law and a legal person. The state is not liable for the obligations of an enterprise, and an enterprise is not responsible for the state’s obligations.

Characteristic features of state production enterprises include organizational and economic unity, unity of production and technology, and independence in economic operations and management. Organizationally, the enterprise is a production unit, usually a factory, plant, mine, electric power station, transportation or communications enterprise, capital construction enterprise, or sovkhoz, although it may consist of several plants or factories that form a production association or combine, in which case the rights and obligations of a legal person apply to the production association or combine, and the constituent enterprises lose their status as legal persons.

A socialist state production enterprise is any production unit in any branch of material production or in that part of the service sector that provides services requiring payment. A group of enterprises producing similar goods (or having a similar production technology) and occupying the same position in the system of expanded socialist reproduction constitute a branch of industry.

As an aggregate of the means of production used by people to produce goods or perform certain tasks (services), the state production enterprise is one of the forms taken by society’s productive forces. The people who operate and control the means of production constitute the enterprise’s production collective. In the process of production the workers enter into relations of production with one another. Consequently, the production enterprise is also a form of production relations.

An enterprise may be established by an order or decision of a higher government agency—a ministry—in accordance with all-Union or republic-level legislation. An enterprise has its own charter and operates in conformity with the Statute on the Socialist State Production Enterprise, approved by the Council of Ministers of the USSR on Oct. 4, 1965. The charter contains the enterprise’s name or number and location, indicates the agency to which it is subordinate, states the purpose and the object of its activity, and specifies its charter assets (ustavnyi fond). An enterprise’s rights and obligations, constituting its jurisdiction, are specialized—that is, they allow it to carry out the activity necessary to accomplish its tasks.

An enterprise is headed by a director, who is appointed or dismissed by the higher agency. The director organizes all the enterprise’s work on the basis of one-man management and bears full responsibility for the activity and condition of the enterprise. The director and the deputy directors act on behalf of the enterprise without special authorization. The enterprise’s management, in the person of the director, annually concludes a collective agreement with the trade union factory committee, which represents the manual and office workers at the enterprise. The management also organizes socialist competition, provides incentives for exemplary workers, helps to make production conferences as successful as possible, and sees to it that the decisions of such conferences are carried out.

The main function of a state production enterprise is productive economic activity. For the benefit of the socialist society the enterprise is expected to achieve the best possible results per unit of material, labor, and financial resources expended—that is, to raise the efficiency of production—and to make maximum use of its production capacity and internal reserves, as well as the land or other natural resources at its disposal. It is the task of the enterprise to practice strict economy and to intensify production. To that end, it must introduce the latest achievements of science and technology into production, incorporate the advanced workers’ experience, follow progressive norms in its use of materials, fuel, and electric power, reduce the prime cost of production, and increase profitability. The productive activity of workshops, sectors, and other subdivisions of the enterprise is based on a system of intraenterprise economic accountability.

The rights and obligations of the enterprise’s structural subdivisions are defined in the regulations covering those units—regulations established by the enterprise itself on the basis of official models. For departments performing control functions, such as the technical control department, the accounting and bookkeeping department, and the legal department, the Council of Ministers of the USSR has established regulations that are binding on all state production enterprises.

The aim of an enterprise’s activity is to produce high-quality goods or services that are needed to meet the requirements of a socialist society. The output targets are stated in the enterprise’s production program and are reflected in its technical-industrial-financial plan. The enterprise drafts and adopts for the enterprise as a whole and for each subdivision a production program with an extended production list and detailed assortment. The production program is based on the planning targets assigned to the enterprise by the appropriate ministry’s main sectorial department, taking into account orders taken directly from consumers or marketing and trading organizations. Under the current economic reforms, enterprises have been granted broader rights, their cost-accounting activity has expanded, their liability has increased, and the number of planning indicators that must be approved by the enterprises’ superiors has been sharply reduced.

The means of production are the enterprise’s production assets. The means of labor constitute the material content of its fixed production assets, and the objects of labor represent its circulating productive capital. Its production assets contribute directly to the creation of the aggregate social product and national income. The enterprise also has such nonproduction fixed assets as housing, buildings and installations used for cultural work and consumer services, and sports and medical facilities. Although they do not contribute directly to the production of goods, these assets play an important part in the reproduction of labor power and in satisfying the workers’ cultural, consumer, and other needs. It is the duty of enterprises to increase the output-capital ratio, that is, to produce and sell more goods for every ruble of its fixed production assets.

Moreover, the enterprise must concern itself with raising the qualifications of its personnel since new equipment and technology require more educated and highly skilled workers.

A very important task of the production enterprise is the steady improvement of its goods in terms of quality, durability, and reliability. The enterprise must also expand the range of its consumer goods and improve their quality in order to satisfy more fully the demands of the population. The goods produced by an enterprise are delivered to buyers in accordance with a national plan and contracts based on the plan. Failure to fulfill plans and targets for the delivery of goods is regarded as a gross violation of state discipline, and those in responsible positions who are guilty of this offense are liable under the law. In order to meet more fully the demand as to the production list, assortment, or quality, enterprises are expanding and strengthening their direct economic contacts with buyers through economic contracts.

Finances are an inseparable part of the economic life of an enterprise. They enter into the enterprise’s day-to-day production activity and are one of the most important forms of socialist production relations. In its financial activity an enterprise makes wide use of credits from Gosbank for capital construction. It may also set the prices for certain types of goods. An enterprise must settle its accounts on time with the state budget, Gosbank, suppliers, and contractors, and it must keep accounts and operational and statistical records. In the course of its productive activity the enterprise sells its goods and makes a profit. Part of the profit is passed on to the state—the owner of the property used by the enterprise—as net social income. The remainder is kept by the enterprise in order to finance its economic needs and to establish economic incentive funds—the material incentive fund, the fund for social and cultural services and housing construction, and the fund for expanding production.

The organizational structure of the enterprise’s management depends on the type of production (unit, series, or mass) and the size of the enterprise (large, medium, or small). These factors determine whether the enterprise will be divided into workshops (tsekhi) for management purposes. The larger the enterprise, the higher the level of mechanization and automation, specialization, and coordination and organization of labor. All this makes it possible to mass produce a narrow range of goods at large specialized enterprises and consequently to achieve the best results in the quality and cost of output and in profitability. The continuing concentration of socialist production in the Soviet economy has necessitated the formation of large production units—production associations (combines) and all-Union and republic industrial associations. The experience of these associations has shown that they are a more rational form of management, promoting the maximum utilization of potential, more rapid scientific and technical progress, reduced costs of management, the use of automatic control systems, and increased production efficiency.

The production enterprise is obliged to take all necessary steps to ensure safe working conditions, to protect the health of its workers, and to protect the environment from pollution by industrial waste, sewage, or refuse. An enterprise may be reorganized or dissolved by a decision of an authorized agency, which may order a merger or a division. The liquidation of an enterprise is carried out by a liquidation commission or the director of the enterprise. Claims upon the liquidated enterprise are met out of its property.