List of Chapters
7: The New Soviet Capitalist

The director of a contemporary Soviet industrial enterprise is, thus, the effective owner of the means of production (other than natural resources) of the enterprise and has full legal responsibility for their operation:

"The rights of the enterprise that relate to its production and economic activity are exercised by its director".

(Statute on the Socialist State Production Enterprise, in: M.E. Sharpe (Ed.): "Planning, Profit and Incentives in the USR", Volume 2; New York; 1966; p. 299).

"The industrial managers bear full responsibility for the production sectors entrusted to them by the state. This responsibility, the role of one-man management in production, is becoming especially important now".

(A.N. Kosygin: "On Improving Industrial Management, Perfecting Planning, and Enhancing Economic Incentives in Industrial Production", in: ibid.; p. 42).

And since this responsibility is primarily to ensure that the enterprise under his control makes the maximum possible rate of profit, he, in Marx's words,

"becomes a capitalist... The expansion of value.. becomes his subjective aim.. He functions as a capitalist, that is, as capital personified and endowed with a consciousness and a will".

(K. Marx: "Capital", Volume 1; London; 1974; p. 151).

As a writer in the (US) "Harvard Business Review" expresses it:

"Many Soviet managers would fit into any corporate hierarchy in the United States and do exceptionally well".

(M.I. Goldman: "More Heat in the Soviet Hothouse", in: "Harvard Business Review", Volume 49, No. 4; July/August 1971; p. 15).

Significantly, in the propaganda campaign preceding and associated with the "economic reform", the demand was put forward for the establishment in the Soviet Union of a network of "business schools" for the training of executives, modelled on that attached to Harvard University in the USA:

"Harvard University (USA) has a school for business executives, training personnel for 300 concerns. There is no special training for managerial personnel in the USSR... It is high time to tackle this problem seriously".

(K. Plotnikov: "E.G. Liberman: Right and Wrong", in: "Voprosy ekonomiki" (Problems of Economics), No. 11, 1962, in: M.E. Sharpe (Ed.): op. cit., Volume 1; p. 165).

In February 1971 the Institute of Management of the National Economy, attached to the State Committee for Science and Technology, was opened in Moscow as the first "business school". (Z. Katz: "The Nachalnik (Executive) Class in the USSR"; Cambridge (USA); 1973; p. 25).

The writer in the "Harvard Business Review" already quoted, commented:

"The Russians have again turned to the non-Communist world; they are creating a network of business schools".

(M.I. Goldman: ibid.; p. 15).

The director of a Soviet industrial enterprise differs from his counterpart in private industry in Britain (the managing director of an industrial company) in that:

1) he is appointed to, and may be dismissed from, his position as director by the state, instead of by the shareholders of the company concerned:

"The director of the enterprise is appointed and relieved of his post by the superior body (i.e., the appropriate Ministry -- WBB)".

(Statute on the Socialist State Production Enterprise, in: M.E. Sharpe (Ed.): op. cit., Volume 2; p. 310).

2) in the absence of shareholdings, his right to draw profits from the enterprise continues only so long as he is actively attached to that enterprise.

On the other hand, the director of a Soviet enterprise differs from his counterpart in nationalised industry in Britain in that he draws, in addition to a substantial salary, profit from the enterprise.

Next Chapter: Chapter 8: Freedom to Hire and Fire

Previous Chapter: Chapter 6: Ownership of the Means of Production

For other works by Bill Bland see the CL site.