Concentration of Socialist Production

the planned process of concentrating production at the largest production units. Technical progress, increases in the capacity of machines, and organization of large-scale mechanized and automated specialized production constitute the material and technical basis for concentration. Under socialist conditions, where all fixed productive assets are owned by the socialist state, the process of concentration is subordinated to the action of the basic economic law of socialism and the law of maximum savings of social labor; thus, efficient organization and high growth rates for social production are ensured.

The concentration of socialist production is a very important form of socializing production. The planned regulation of the concentration of production takes various forms: the expansion, rebuilding, and modernization of existing enterprises; the construction of large new enterprises; and the consolidation of existing enterprises to form production associations.

The level of concentration in Soviet industry is measured by a system of indexes that are considered together. The basic index determining the size of an enterprise is the volume of output produced. This figure is used for intrasectorial comparisons where physical indexes are employed or for comparisons between enterprises producing the same types of output. With the scientific and technological revolution, indexes such as the value of fixed assets, the capacity of power installations, and energy consumption are increasingly important for determining the level of concentration of socialist production. The index of number of workers does not reflect the dynamics of concentration accurately; because of the increased mechanization and automation of labor processes, the number of workers may decrease although production is rising. In international comparisons, however, this index is used extensively. Taken together, the indexes give a comprehensive picture of the level of production concentration.

Concentration has substantial economic advantages as a form of production organization. Large enterprises have a higher level of labor productivity and a lower cost output than small enterprises; moreover, the technology of production is significantly more refined at large enterprises. The cost of equipment decreases as the capacity of machine aggregates increases and more productive equipment is used. In addition, some expenditures (administrative and management costs, expenditures for production services) do not increase at the same rate as production volume. Therefore, they make up a significantly smaller share of the prime cost of a unit of output for large enterprises than they do in small-scale production. Concentration of socialist production is inseparably linked with specialization of production and with integration in industry.

The conditions of socialist production make it possible to use the advantages of concentration to further the well-being of all society’s members. The social significance of consolidating production is that through an increase in the level of mechanization and automation of production the collective nature of labor can be intensified and heavy manual labor eliminated. In all stages of socialist building in the USSR, therefore, enormous attention has been given to raising the level of concentration of production.

In the early 1920’s, after the end of the Civil War of 1918–20, socialist production was concentrated at the largest and technically best-equipped enterprises in order to make better use of limited raw materials and fuels. In the 1920’s the form of association was the trust (trest), which brought together enterprises not having legal independence; in 1922–23 there were 421 trusts, which accounted for 90 percent of all industrial enterprises. The growth in concentration of socialist production in this period is seen in the change in the number of workers at an enterprise: the average industrial enterprise in 1922–23 employed 150 people, whereas in 1926–27 the figure was 194.

In the period of industrialization, concentration of production developed primarily through the construction of large enterprises. During the second five-year plan (1933–37) alone, more than 9,000 large enterprises were built.

In the postwar decades, party economic policy has been directed to further increasing the concentration of socialist production. In 1971 in the USSR large industrial enterprises (more than 1,000 employees) constituted 10.9 percent of the total number of enterprises but concentrated 61.5 percent of the work force, produced 60.1 percent of production volume, and consumed 82.7 percent of all electric power. Despite the high level of concentration in Soviet industry, however, enterprises with 200 or less workers constituted 54.9 percent of the total number of enterprises in 1971. Most of the small enterprises lag behind the large ones in a technical sense and have electricity-worker and power-worker ratios that are several times lower, consequently having a lower labor productivity. The way to transform such enterprises technically is to include small enterprises in a single production complex, a production association, based on a narrow specialization and on technological coordination with a main enterprise.

In accord with the party policy of further concentration of production in the national economy of the USSR, a transition is being made in 1973–75 to industrial administration by two-element and three-element line-of-command systems and to the formation of large economically self-supporting all-Union and republic industrial associations, production associations, and combines. Including small enterprises in a production association increases their operating efficiency and accelerates the transition to mass production and the adoption of technologically progressive equipment. The increase in labor productivity frees part of the production area and increases the level of product and technological specialization. Within the confines of such complexes, not only large but also medium-sized and small enterprises may be quite efficient. The development of the socialist economy requires not just any consolidation of enterprises but rather that consolidation which leads to an increase in the efficiency of social production. The task is to achieve a rational combination of enterprises of different sizes, large, medium-sized, and small, with due regard for the need for the even distribution of productive forces.

The improvement of production efficiency by every means available makes it possible to take fuller account of the requirements of the basic economic law of socialism: both this improvement and economic expediency presuppose the establishment of an assortment of enterprises and their sizes that is optimal from the point of view of the whole national economy. The size of enterprises can be considered optimal where maximum product is received with minimum expenditures. The optimal dimensions of enterprises change in time and differ by sector. When determining the optimal size, consideration should be given not just to the prime cost of output but also to transportation and over-head expenditures.

The process of concentration is also taking place in agriculture. Collectivization led to the establishment of large-scale agricultural production. A developed socialist society is characterized by continued growth in the concentration of agricultural production. The average size of agricultural enterprises has increased significantly. In 1970 the average kolkhoz had 453 households, 6,100 hectares of agricultural land, 60 tractors (converted to 15-horsepower units), and more than 1.8 million rubles of indivisible funds (the farm’s own investment funds); the average sovkhoz in 1970 had 6,200 hectares of cropland, 123 tractors (15-horsepower units), 1,944 head of cattle, and more than 2.4 million rubles of fixed productive assets. These figures are many times what they were in the 1930’s. From 1934 to early 1971 the average size of kolkhozes increased more than six times when measured by number of households, seven times by area of public cropland, 30 times in the number of cattle, and more than 100 times in the value of fixed assets. Interkolkhoz associations and enterprises play a fundamental part in the collectivization of kolkhoz production; at the end of 1971 there were 4,781 such associations.

Rapid growth in concentration of production is typical of all the countries of the world socialist system. In Poland, for example, the number of industrial enterprises with more than 1,000 employees increased from 9.4 percent in 1960 to 15.8 percent in 1968 (including a rise from 18.4 percent to 28.9 percent in the public sector). In the German Democratic Republic in 1969, only 4.7 percent of the enterprises had more than 1,000 employees, but they concentrated 60.6 percent of the work force and 61.8 percent of output.

The concentration of production takes on added significance with regard to the socialist economic integration of the countries of the Council for Mutual Economic Assistance (COMECON). The optimal sizes of enterprises should be determined with due regard for the needs of the world socialist economy, not just those of the particular country. This consideration is especially important for small countries because it gives them an opportunity to increase the concentration of production and to orient large-scale specialized enterprises so as to satisfy not only domestic needs but also those of the other COMECON members. The Comprehensive Program for Socialist Economic Integration adopted by the 25th session of COMECON in 1971 opens up new possibilities in production concentration for the countries of the world socialist commonwealth.