Production Assets, Fixed

the portion of the production assets of socialist enterprises and associations that serves a number of production cycles. While maintaining their physical form, fixed production assets transfer (transmit) their value to the new product of labor gradually, or piecemeal, keeping up with wear.

Fixed production assets include the instruments of labor, production buildings and installations, and implements with a value of at least 50 rubles and a service life of at least one year. In agriculture, fixed production assets also include livestock, irrigation installations, and orchards and vineyards. Capital investments and amortization deductions are the source for the replacement and expanded reproduction of fixed production assets (seeAMORTIZATION OF FIXED CAPITAL). The reproduction of fixed production assets takes place in conformity with a plan.

As of Jan. 1, 1974, the fixed production assets of the USSR amounted to 675 billion rubles in current prices (62.4 percent of the fixed capital stock of the national economy in comparable prices). Between 1960 and the beginning of 1974, the country’s fixed production assets increased by a factor of 3.1. From 1960 to 1973, Bulgaria’s fixed production assets grew by a factor of 3.5. During the same period, the fixed production assets of both Poland and the German Democratic Republic (GDR) doubled, Rumania’s fixed production assets tripled, Mongolia’s increased by a factor of 2.9, and Hungary’s grew by a factor of 2.1. Most of the fixed production assets of these countries are concentrated in industry (see Table 1). In the USSR between 1913 and 1940, the fixed production assets of industry and construction increased by a factor of 29.4; of agriculture, by a factor of 6.5; and of transportation and communications, by a factor of 7.6. Between 1940 and 1973 the fixed production assets of industry increased by a factor of 13.8; of agriculture, by a factor of 5.6; of transportation and communications, by a factor of 7.8; and of construction, by a factor of 32.6.

At all stages of the development of the Soviet national economy, the rate of growth of fixed production assets has significantly outstripped the increase in the number of employees. As a result, there has been a systematic increase in the capital-labor ratio—an important condition for increased labor productivity. Between 1940 and 1973 the capital-labor ratio rose by a factor of approximately 6, and labor productivity by a factor of 5.2.

The component structure of the fixed production assets varies in the different sectors of the national economy and at different enterprises in the same sector (see Table 2).

The instruments of labor constitute the active portion of the fixed production assets, because changes in them are decisive in the development of social production. The mechanization of production, the growth of labor productivity, and the growth of the production capacity of an enterprise are determined primarily by the active fixed production assets. However, analysis of the component structure of the fixed production assets in industry

from 1928 to 1973 shows a certain decline in the share of the active portion and an increase in the passive portion, owing chiefly to installations. This is explained primarily by sharp shifts in the sectoral structure of industrial output. From 1928 to 1973 the share of group A sectors (production of the means of

production) in the total volume of output increased from 39.5 percent to 74 percent. The proportion of installations in the fixed production assets is several times higher in certain branches of group A (especially electric power and the petroleum, coal, and cement industries) than in light industry and food processing.

The component structure of the fixed production assets in industry has been noticeably influenced by changes in the geographic location of industry. During the postwar years most capital construction was carried out in the eastern regions of the USSR, which are sparsely populated and economically undeveloped. Thus, the proportion of passive fixed production assets has increased significantly in industry.

The increased efficiency of socialist production is, to a significant degree, related to economic factors such as the increase in output per unit of equipment, the increase in the equipment shift index, the elimination of stoppages, the reduction of the time required to put new capacity into operation, and the further intensification of production processes. Scientific and technological progress is associated with a qualitative improvement in the fixed production assets, as well as with their quantitative growth. These qualitative changes also contribute to increased efficiency in social production.

The output-capital ratio is a generalizing indicator of the effective use of fixed production assets. Among the important conditions for improving this indicator are a rational equipment load, or the degree of work performed by machines and other elements of the fixed production assets (seeEQUIPMENT SHIFT INDEX); accelerated amortization; and the replacement and modernization of obsolete machines, as well as the improvement of the technological level of available equipment (seeOBSOLESCENCE OF FIXED CAPITAL). The economic reform of 1966 strengthened the interests of the enterprises in increasing the output-capital ratio, since an increase in the volume of output produced (and sold) contributes to an increase in the total profit and level of profitability of the enterprises.