Creating Soviet Industry: The House That Stalin Built Paul R. Gregory and Andrei Markevich The opening of Soviet state and party archives has provided the first real opportunity to study high-level decision making in the Soviet economic and political system. Earlier efforts to study the Soviet system from within. provided revealing insights despite the modest source base, which con- sisted of such sources as Nikita Khrushchev’s speeches about the size of the armed forces, the captured Smolensk party archives, or interviews with émigrés.! In stark contrast, the opening of the archives more than a decade ago has provided an “embarrassment of riches” consisting of hun- dreds of thousands of official documents and personal papers. Now in- stead of searching for morsels, researchers must grapple with absorbing massive volumes of information.? Economists should be eager to explore the Soviet state and party ar- chives because they can provide insights into the functioning of the most complex economic organization ever devised—the administrative- command economy. Although economists generated an enormous litera- ture on the Soviet system prior to its collapse, significant gaps remained. We had a reasonable understanding of how enterprises, retail markets, and labor markets functioned, but we knew relatively little about how the system operated within industrial ministries, regional economic orga- nizations, and the top decision-making bodies, such as the Politburo, the Council of Ministers, and Gosplan. The Soviet system revealed few of its secrets in these areas. But, although historians are feasting on this embar- rassment of riches from the archives, relatively few economists are.* Three reasons explain our modest numbers: First, economists’ relatively short research time horizons are not suited to archival research. A young econ- omist embarking on archival research would stand little chance of achiev- ing tenure. Second, economists work with theories and numbers rather than with the anecdotes, decrees, memoirs, and other qualitative infor- mation contained in archives. Economists are expected to test hypothe- ses, and this is not easily done with qualitative data. Third, economists with Russian-language skills have turned their attention to the transition. Giving advice to countries in transition has proven to be a more attractive Support for the research in this article was provided by the Hoover Institution and by the National Science Foundation. We wish to thank the editor, as well as two anonymous re- viewers, for their comments. 1. Joseph Berliner, “The Contribution of the Soviet Archives,” in Paul R. Gregory, ed., Behind the Fagade of Stalin’s Command Economy (Stanford, 2001), 1-10. 2, For a dliscussion of this embarrassment of riches, see J. Arch Getty and Oleg Nau- mov, The Road to Terror: Stalin and the Self-Destruction of the Bolsheviks, 1932-1939 (New Haven, 1999), preface. 3. The economic history-Soviet archives working group maintains its PERSA web- site, in conjunction with Mark Harrison of Warwick University: wwwSoviet-archives- research.co.uk (last consulted 22 August 2002) Slavic Review 61, no. 4 (Winter 2002)788 Slavic Review task than sitting in dusty archives. Fortunately, new economic historians, new institutional economists, and political economists all focus on the ef- fect institutions have on economic outcomes, and they have usually worked with data sources that are less rich than the Soviet archives. But these dis- ciplines have focused on market rather than on planned institutions, even though the field of new institutional economics was created when Nobel Laureate Ronald Coase began considering the business firm, an institu- tion that uses directives rather than markets to allocate its own internal resources.‘ Moreover, the initial impulse to study the administrative- command economy originated in the 1920s and 1930s with the critiques of planned socialism written by F. A. Hayek and Ludwig von Mises, work that served in part to earn Hayek a Nobel Prize.> Although western spe- cialists on the administrative-command economy came away convinced of its ineffectiveness, the appeal of this system remains strong and may grow as the realities become a more distant memory. Our conclusion about the system’s ineffectiveness results from its declining growth and productivity and its perceived disfunctionalities. The debate over the “jockey or the horse,” to use the late Joseph Berliner’s analogy, continues: Did the Soviet economic system fail because it had the wrong leaders who adopted the wrong policies (the jockey), or because it was inherently fundamentally flawed (the horse)?® The ultimate goal of archival-based economic re- search should be to resolve Berliner’s jockey versus the horse question. Such a monumental issue, however, can be dealt with only incremen- tally by considering whether specific economic institutions produce either efficient or inefficient economic outcomes. Are the legal, political, and other institutional rules of the game (Abram Bergson used the term work- ing arrangements) so organized that they waste and squander resources or are they efficient and produce economic growth? Hayek and Mises argued that a planned socialist economy lacks markets and private property and hence could not survive. Nevertheless, the Soviet system did indeed sur- vive for more than sixty years. A number of economists offered explana- tions for its durability: Joseph Berliner and David Granick showed that enterprises operated in quasi-markets that gave them an unexpected amount of latitude.’ Gregory Grossman and Vlad Treml documented an active second economy that filled the gaps in consumer goods left by the planned economy.’ Bergson showed that the Soviet labor market ac- 4, Ronald Coase, “The New Institutional Economics,” American Economic Review 88, no. 2 (May 1998): 72-74. 5. F. A. Hayek, “Socialist Calculation: The Competitive Solution,” Economica, n.s. 7 (May 1940): 125-49; Ludwig von Mises, Socialism: An Eoonomic and Sociological Anabysis, trans. J. Kahane (New Haven, 1936). 6, Joseph Berliner, “The Soviet Past and the Russian Transition” (paper, international conference, “The Soviet Economy: Views from the XXI Century,” Zvenigorod, June 2001). 7, Joseph S. Berliner, Factory and Manager in the USSR (Cambridge, Mass., 1957); David Granick, Management of the Industrial Firm in the USSR (New York, 1954). 8, Gregory Grossman, “The Second Economy of the USSR,” Problems of Communism 26 (September—October 197): 25-40; Viad Treml, “Production and Consumption of Alcoholic Beverages in the USSR: A Statistical Study,” Journal of Studies on Alcohol 36 (March 1975).Creating Soviet Industry: The House That Stalin Built 789 tually had significant market elements.® These studies agreed that the sys- tem was more complex and subtle than its stereotypes suggested. But economists were never able to discern the actual working arrangements for high-level planning and distribution of industrial products, a process that was hidden behind the official myth of scientific planning. Although Eugene Zaleski’s research on Soviet planning replaced scientific planning with ad hoc resource management,” we still did not know how high-level resource allocation decisions were made and with what motivations, how they were implemented and with what degree of cooperation from sub- ordinates. In this paper, we seek to shed some light on this subject using a case study of commissariats in the 1930s, the period during which this system was created. The Industrial Commissariat as an Economic Institution Although an extensive literature exists on the Soviet industrial ministries (the People’s Commissariats),, we still know relatively little about how they operated."! The textbook stereotype has focused on the powerful State Planning Commission (Gosplan) as the allocator of resources, but most actual planning and resource management was carried out by the com- missariats and more specifically by their branch administrations (glavk).! This study considers the internal workings of the commissariats, rather than their dealings with such organizations as Gosplan and the Commissariat of Finance.!° We study the two dominant industrial administrative units of the 1930s, the People’s Commissariat of Heavy Industry (Narodnyi kom- missariat tiazheloi promyshlennosti, NKTP) and the People’s Commis- sariat of Light Industry (Narodnyi kommissariat legkoi promyshlennosti, NKLP), both formed in 1932, when the Supreme Council of the National Economy was dissolved and replaced by three separate commissariats. Sergo Ordzhonikidze, Politburo member and early confidante of Iosif Stalin, headed NKTP from its founding in 1932 until his death in 1937."4 9. Abram Bergson, The Economics of Soviet Planning (New Haven, 1964), chap. 6. 10. Eugene Zaleski, Stalinist Planning for Economic Growth, 1933-1952 (Chapel Hill, 1980). 11, These commissariats have been discussed in the theoretical and applied litera- tures: Paul R. Gregory, Restructuring the Souiet Economic Bureaucracy (Cambridge, Mass., 1990); William J. Conyngham, The Modernization of Soviet industrial Management (Cam- bridge, Mass., 1982); Alice C. Gorlin, “The Power of Industrial Ministries,” Soviet Studies 37, no. 3 (1985); Michael Keren, “The Ministry, Plan Changes, and the Ratchet Effect in Plan- ning,” Journal of Comparative Economics 6, no. 4 (1982); E. A. Rees, ed., Decision-Making in the Stalinist Command Economy, 1932~37 (New York, 1997) 12. Glavk (from glavnoe upravlenie) is the acronym used to refer to the branch pro- duction units of the commissariat. 13. For a paper covering this latter topic, see Eugenia Belova and Paul Gregory, “Dic- tators, Loyal, and Opportunistic Agents: The Soviet Archives on Creating the Soviet Eco- nomic System,” Public Choice 1, no. 2 (July 2002). 14, Sergo Ordzhonikidze guided the Caucasian party organization through the civil war. With reluctance and over the protests of his fellow Caucasian party comrades, he ac- cepted Stalin's call to Moscow, where he occupied a number of central party positions, in- cluding the chairmanship of the party's feared Worker-Peasant Inspection. With his ap- pointment to head the super-ministry, the Supreme Council of the National Economy, he790 Slavic Review The second commissar of NKTP was the former director of Gosplan, I. 1. Mezhlauk, who perished in the Great Purges in 1938. Lazar' Kaganovich, a master bureaucrat and Politburo member, served as commissar in the post-purge period until NKTP’s final breakup in 1939, From 1932 until 1937, NKLP was headed by I. E. Liubimoy, a less well known figure who also perished in the purges and whose highest party rank was member of the Central Committee. NKTP was in charge of virtually all heavy industrial goods—metals, mining, machinery, and defense goods. NKLP covered cotton, linen, and wool textiles, as well as leather goods. In December 1936, NKTP’s defense industries were spun off to become the Commissariat of the Defense In- dustry. In August 1938 an independent Commissariat of Machine Build- ing was established. On 24 January 1939 NKTP itself was divided into sev- eral independent commissariats. Throughout this period, a glavk directly supervised enterprises and trusts in that branch of the commissariat. We will examine a representative glavk within NKTP, its Main Administra- tion for the Metals Industry (GUMP), which was in charge of metallurgi- cal production, metal pipes, refractory materials, coke-chemical prod- ucts, and mining for metallic ore. One of thirty-four glavks within NKTP, GUMP was the second largest in terms of employment. In the three-tiered Soviet system, the industrial commissariats occu- pied the intermediate level between the “dictator” (assisted by functional agencies such as Gosplan or the Gommissariat of Finance) at the top, and enterprises subordinated to the industrial commissariat (at the bottom). The “dictator” was an interlocking directorate of officials from the Polit- buro and the Council of People’s Commissars (Sovnarkom).!® Notably, the most important industrial commissars, such as Ordzhonikidze and later Kaganovich, were also members of the interlocking directorate, al- lowing them to plead their cases both within the dictatorship and as part of the system’s vertical hierarchy. Stationary Bandits and Vertical and Horizontal Relations Mancur Olson first raised the issue of the motivation (objective function) of the dictator of a planned economy." A dictator with a long time hori- zon (a “stationary bandit” in Olson’s terminology) would make economi- cally efficient decisions, simply stated, because political power ultimately depends on economic power. Only a stationary bandit, motivated by con- siderations of growth and efficiency, could generate superior economic outcomes by combating the threat of vested interests (industrial or re- became the leading manager of production, in charge of virtually all industrial produc- tion. With the breakup of the Supreme Council in 1932, Ordzhonikidze became the head of NTP, the dominant industrial ministry of the 1930s. Crude, short-tempered, and out- spoken, Ordzhonikidze wielded enormous influence. Just as it is difficult to separate the creation of the system from Stalin; so is it difficult to separate the creation of Soviet in- dustry from Ordzhonikidze. 15. Gregory, Restructuring the Soviet Economic Bureaucracy. 16. Mancur Olson, “The Devolution of Power in Post-Communist Societies,” in Rob- cert Skidelsky, ed., Russia's Stormy Path to Reform (London, 1995), 9- 42.Creating Soviet Industry: The House That Stalin Built 791 Price pee Quantity Figure 1. Supply and demand curves. gional elites). Hayek and Mises disputed whether even a well-intentioned dictator could create growth and efficiency, largely because the dictator's apparatus would be overwhelmed by insoluble information problems, but contemporary political economists have focused on the dictator's prob- lem with vested interests. Ronald Wintrobe, among others, attempted to spell out the parameters of the conflict between the dictator and special interests: The dictator imposes his will through a vertical hierarchy. If the dictator is to be credible, subordinates must obey vertical orders.'” Sub- ordinates, on the other hand, are tempted to maximize their narrow in- terests by engaging in profitable horizontal dealings, contrary to the dicta- tor’s vertical orders. Instead of following orders to deliver a product to A at the dictated terms, the subordinate may deliver to B and receive better terms negotiated by the two parties. Figure ] summarizes the confrontation between vertical and horizon- tal structures. The demand curve, D, shows the quantity demanded of a given commodity, X, by its various potential users at different prices, P. The price could be the actual price that users pay, or some more com- prehensive price that captures the resource costs involved in acquiring X. The supply curve, S, shows the various quantities of X supplied at differ- ent prices. In a market economy, all those willing to pay the market price (P’) would get X’, but in an administrative-command economy, the dicta- tor decides both how much X is produced and who gets X. The dictator sets the production of X at Xp and its price at P*. At this price, X is de- manded but only Xo is available for distribution; the dictator decides who 17. Ronald Wintrobe, The Political Economy of Dictatorship (Cambridge, Eng., 1998).792 Slavic Review gets Xo among all those willing to pay at least P*. The dictator issues or- ders through his vertical hierarchy telling suppliers to whom to deliver X. If there is perfect “vertical trust,” subordinates obey, and only those des- ignated to receive X will actually get it. The diagram illustrates why horizontal structures inevitably compete with vertical structures. Producers of X realize that they are producing a valuable commodity. Buyers want more than is available at P*. In fact, a number of buyers are prepared to pay a price well in excess of the dicta- tor’s price, such as P**, Those who are prepared to pay more may also be those who supply the producers of X with a key input, Y. The producers of Yalso realize that they are producing a valuable commodity for which a number of buyers are prepared to pay more than the dictator’s price. If the producers of X and Y follow vertical orders, they receive the official price (P*), and because they have not violated orders, they will receive official rewards. On the other hand, both have passed up the opportunity to sell their goods at a price (P**) above the official price (P*). If they de- cide to sell at the higher price, they could obtain monetary bribes (added on to the official price), maintain good relations with their own best cus- tomers, and receive preferred treatment if the buyer also happens to be a supplier. If the reward from the horizontal transaction exceeds the reward for vertical loyalty, the producer will engage in “unplanned” horizontal transactions. The “profit” from this horizontal transaction is typically called an economic rent. Unless the dictator can rely on perfect loyalty (due, let us say, to social- ist enthusiasm), it must monitor the fulfillment of the production and de- livery plan. A perfectly informed dictator could impose vertical discipline, but the agent will always possess superior information (asymmetric infor- mation), and thus be left with the choice to obey or to engage in oppor- tunistic behavior. Opportunism is promoted by the fact that the superior must hold the agent responsible, in this case, for production and delivery, and must mete out punishment for plan failure. The agent has an incen- tive to use its information advantage to obtain easy production and de- livery plans and to provide inaccurate information in the case of plan failure. The remarkable feature of the diagram is its generality. The dictator could be the Council of People’s Commissars and the agent NKTP, or the dictator could be NKTP and the agent a glavk, or the dictator could be a glavk and the agent a metals factory. This generality follows from the “nested dictatorship” form of organization of the Soviet command econ- ‘omy, meaning that organizations duplicated the administrative and con- trol structures of their superior along a vertical chain of command." Sub- ordinates at each level of the vertical hierarchy played basically the same game with their superior. The idea of a nested dictatorship opens up new avenues for understanding how the system functioned. How the game is played at one level provides insights into how the game is being played at higher or lower levels. 18, Valery Lazarev and Paul Gregory, “The Wheels of a Command Economy: Allo- cating Soviet Vehicles,” Economic History Review 55, no. 2 (May 2002): 324-48,Creating Soviet Industry: The House That Stalin Built 793 There are models of the Soviet dictator other than Olson’s optimistic stationary bandit. The dictator could be motivated by considerations of political power and could allocate resources “selfishly” to maximize his hold on political power. Or, the dictator could simply be the captive of vested interests, playing the role of referee. These alternate models are summarized elsewhere. In this paper, we do not dwell on the dictator’s objectives; they are taken as given. Rather we focus on the agents’ reac- tions to these directives. Rules of the Game The above theory suggests that we examine the relations between superi- ors and subordinates for conflicting objectives, presuming that the supe- rior will hold the subordinate responsible for concrete results, for the agent’s opportunistic use of information, and for “unplanned” horizontal dealings. We should also be alert to the dictator’s changing of institutional arrangements to minimize opportunistic behavior and the agents’ crea- tion of informal institutions to protect against unfavorable vertical orders and to conceal horizontal relations. We should not expect a wealth of in- formation on “unplanned” dealings in official archives, but we can per- haps capture them indirectly through the dictator’s adjustments of insti- tutions. Most important, we should examine working arrangements for direct signs of the growing power of vested interests, given a stationary bandits presumed aversion to narrow interests. Formal versus Implicit Contracts: Fulfill the Plan. What Plan? Economic institutions can operate on the basis of formal and informal rules. European labor markets and the U.S. civil service operate according to written rules and regulations, while U.S. private labor markets operate primarily according to unwritten rules, called implicit contracts. One would expect that institutions in a hierarchical administrative-command economy would operate according to written rules, but both NKTP and NKLP operated for years without meaningful formal charters, and their ultimate charters said little about operating rules and responsibilities. The thousands of pages of official documents in the NKTP and NKLP archives do notyield one clear statement of formal operating rules and procedures. Both NKTP and NKLP were formed on 5 January 1932 when the Su- preme Council of the National Economy was split up and three industrial commissariats—heavy industry, light industry, and forestry products— were created.” Their founding documents simply distribute enterprises among the three commissariats, allocating the preponderance to NKTP and saying virtually nothing about governance procedures. Not until 19. Rees, ed., Decision-Making in the Stalinist Command Economy, 6~7; Valery Lazarev and Paul Gregory, “Dictators and Cars: A Study in the Political Economy of Totalitarian- ism” (paper presented at the University of Houston, March 2002). 20. Decree No. 8 of the Central Executive Committee of Somarkom in Gosu- darstvennyi arkhiv Rossiiskoi Federatsii (GARF), f. 5446, op. 1, d. 15,1. 13.794 Slavic Review 10 November 1937 was NKTP’s charter approved. Although this charter provided some detail on internal organization, it decreed only that NKTP should “manage the fulfillment of approved government plans of produc- tion, finance, and capital construction, and, to this end, should organize the work of subordinated enterprises, accord them technical assistance, organize supply and distribution of production, and direct the selection of personnel.”*! NKLP’s charter, approved in 1938, established it as a union-republican commissariat with offices in Moscow and in the repub- lics, but also provided no clear operating instructions.*? NKTP’s Main Administration for the Metals Industry (GUMP) was formed in 1931 to strengthen “the economic and technical management of the metallurgi- cal industry.”** GUMP’s formal charter of June 1933 simply declared it responsible for plan fulfillment and technical management (“extracting optimal indicators”) of enterprises producing ferrous metals, iron ore, coke-chemicals, and fired bricks.*4 Each commissariat had a small central office, glavks, and functional departments, such as planning and finance. They also included their own construction departments in the 1930s. In the mid-1930s, Ordzhonikidze’s central staff consisted only of 35 individ- uals, while the entire commissariat employed almost 4,000. Most officials and employees worked in the glavks that actually managed production enterprises. The sheer organizational complexity of NKTP provoked the following outburst from Ordzhonikidze: “No matter how often we reorga- nize the structure of our apparatus, when you take it and picture it on pa- per, you cannot find anything of such a formless character anywhere.”?* Administrative complexity appeared unavoidable, however. By 1938, NKTP had 34 glavks and 24 functional departments that managed the production of more than half of the USSR's industrial output. NKTP’s metal administration (GUMP) had 595 employees to oversee the produc- tion of 27 million tons of pig iron, 18 million tons of steel ingots, 13 mil- lion tons of rolled steel, 3 million tons of nickel, and so on.?° Organizing the hundreds of factories that produced these products with fewer than 600 employees appears to have been a forbidding task. The commissari- ats and glavks had to organize both production and distribution, allocat- ing heavy industrial products, not only among its own glavks and enter- prises, but to users in other sectors of the economy. The charters of the industrial commissariats and their glavks, while not providing information on operating rules, were explicit on two points: they clearly delineated the industrial activities subordinated to the differ- ent agencies by assigning specific enterprises to them, and they unam- biguously stated that they were responsible for fulfilling the “plan.” For 21. Charter for NKTP approved by Sovnarkom on 11 November 1937, in Svod zakonov 4 postanoulenii raboche-krestianshogo pravitel’stua (Moscow, 1937), 375. 22. Charter for NKLP approved by Sovnarkom on 21 July 1988, in Svod zakonov i postanovlenii raboche-krestianskogo pravitel’stua (Moscow, 1938) , 207. 23. Decree No. 640 of Sovnarkom from 11 September 1931, Rossiiskii gosudarstven- nyiarkhiv ekonomiki (RGAE), f. 3429, op. 1, d. 146, IL 809-10. 24. RGAE, f. 4086, op. 2, d. 272, 1. 6. 28, RGAE, f. 7297, op. 38, d. 104, 1 2 26. Zaleski, Stalinist Planning for Economic Growth, 551. These figures are for 1937.Creating Soviet Industry: The House That Stalin Built ‘795 the commissariat, the “plan” was the aggregated total of the plans ofall en- terprises subordinated to it. For the glavk, the “plan” included the plans of the entire subgroup of enterprises for which it was responsible. The legal obligation “to fulfill the plan” raised massive ambiguities:*” Plans included nonoperational five-year plans, annual plans (typically referred to as “in- dustrial-financial plans”), and the operational quarterly, monthly, and even 10-day (decadal) plans. In some cases, there was no annual plan at all, or it was prepared retrospectively.°8 Moreover, “plans” were frequently changed, and they were multidimensional, typically containing produc- tion targets, both in physical and value terms, production assortments, la- bor productivity targets, cost reductions, capital construction completion dates, and so on. Which of these plans was the commissariat or glavk to fulfill? The most important plan target was production in a combination of natural and monetary terms, the so-called val plan.2° As an NKTP official, a Comrade Zolotorey, declared at a commissariat meeting in 1934: “Ful- fillment of the plan—this is fulfillment of the production program [the val plan].”*" Enterprises admitted that they fought most “for fulfillment of quantitative indicators” and often in this battle “experienced many losses that were reflected in quality.”®! Earning enough revenues for financial self-sufficiency (called then and now “full economic accounting”) was not a priority, as illustrated by a rare transcript from an evening meeting of NKTP leaders in November 1935 chaired by Ordzhonikidze.* All pro- 27. Eugenia Belova, “Economic Crime and Punishment,” in Gregory, ed., Behind the Facade, 131-58. 28. Belova and Gregory, “Dictators, Loyal and Opportunistic Agents.” 29. “Val” stands for valovaia produktsiia, or “gross production.” It was commonly de- nominated in ruble terms in the constant rubles of a base year, such as 1926-27 prices. 30. RGAE, f. 7297, op. 28, d. 335, 1 5. 31. RGAE, f. 7297, op. 38, d. 177, 1.10. 32. The transcript reads as follows: Comrade Tal:.. .a special survey that we conducted yielded interesting results. It contained two questions: 1) Name an approximate date (month, quarter, or year) when you can get by without subsidies [dotatsi}? 2) If you do not receive a subsidy, what kind of profit will you earn? Fill it out and pass it to your neighbor. ‘The first to receive this survey, a Comrade Birman, passed it to his neighbor without filling it out (laughter in the hall). It then went to a Comrade Makarov. I do not know whether he had agreed with Birman before hand, but he did the same—he passed it on without filling it out. I was then required to have a mathematical discussion with Makarov, and I told him: “Keep in mind that zero is also a number and can sometimes scream out.” When the survey got to a Comrade Puchkov, he wrote down that he could manage in two and a half years. The most laconic response was given by Comrade Zolotorev: “1936.” The most complex answer came from Comrade Fishman: “The enterprises of [my] glavk can make do with considerably lower subsidies than planned and will be able to get by without sub- sidies from the first quarter of 1936. As for the size of the profit, I cannot tell Comrade Sergo or Comrade Piatakov how large it will be.” Tal concluded his report with the remark: “The survey is small but as you see it teaches an interesting lesson.” Ondzhonikidze: “Its a shame you did not continue it” Comrade Tal: “We will continue it.” Ondzhonikidze: “Now they will not fill it out; they fear we will use it against them and publish the results.” RGAE, f. 7297, op. 38, d. 17,1. 181. Ordzhonikidze’s quick dismissal of this agenda item shows that glavks and enterprises were held responsible for produc- tion. Any losses would be automatically covered.796 Slavic Review duction plans were not created equal. The plans of the most important branches had to be fulfilled first, even if this meant that other plans had to be sacrificed. Defense production occupied a special position as Ord- zhonikidze’s directive indicates: “All orders for the Commissariat of De- fense for equipment and materials must be fulfilled exactly according to the schedule without any delays.”** Orders for defense were declared “the main task of glavks and sectors of heavy industry” according to an NKTP decree of February 1932. Priority plans were examined in special meet- ings organized by the commissar, such as the 8 June 1937 meeting orga- nized by NKTP commissar, Mezhlauk, on fulfilling special steel targets for the Commissariat of Defense.** The commissar stood ready to allocate ad- ditional resources for priority targets. Ordzhonikidze: “I am prepared to give ferrous metallurgy whatever it needs, take all, just do what you are re- quired to do,” or the GUMP Directive (No. 219) of October 1933 to al- locate additional materials “in order to guarantee the uninterrupted work of the factories of the trust Eastern Steel [Vostokstal].”°7 Whole enter- prises could be transferred to priority branches to insure the supplies, such as NKTP’s Order (No. 51) of March 1932, which assigned five facto- ries “to satisfy in necessary quantities the demands of these enterprises without any delay.”*8 Major construction projects placed under the direct control of the collegium of NKTP occupied a privileged position. Sovnar- kom Decree No. 1794 from 21 August 1933, “About Automobile Facto- ries,” provided special resources for completing the Molotov and Stalin automotive plants.*” Responsibility and Excuses If “responsible” people are in charge of economic institutions, the lack of formal rules and the reliance on implicit contracts become a more attrac- tive option. As Kaganovich, Stalin's first deputy, wrote to Stalin on 21 Sep- tember 1931: “The repeated experience of my work with [he names com- missions and individuals] has demonstrated that the main thing of course is the people in charge of the commissariats.”*” Indeed the archives reveal that more Politburo attention was devoted to personnel matters, which was Stalin's speciality, than to any other subject.” Cadre policies were spelled out in detail beginning in the 1920s, when the Politburo itself filled 647 nomenklatura positions. Party documents from the 1930s describe ap- 38. RGAE, f. 7297, op. 38, d. 304, |. 22. 34. NKTP Decree No. 24ss (ss = absolutely secret) from 7 February 1982, RGAE, £. 7297, op. 38, 4.5, 1.11 35. RGAE, f. 7297, op. 38, d. 304, 1. 81 36. RGAE, f. 7297, op. 38, d. 10, 37. RGAE, f. 4086, op. 2, d. 276, 38. RGAE, f. 7297, op. 38, d. 5, 1. 27. 39. RGAE, f. 7297, op. 1, d. 25, 1.17. 40. O. V. Khlevniuk, R. Davies, L. P. Kosheleva, E. A. Ris, and L. A. Rogovaia, Stalin i Kaganovich: Perepiska, 1931-1936 ge. (Moscow, 2001), 114, 41. Rees, ed., Decision-Making in the Stalinist Command Eeonony.Creating Soviet Industry: The House That Stalin Built 797 pointment procedures in some detail.*? Commissarial appointments and staffing were matters of extreme interest at the top, and Stalin’s corre- spondence is filled with discussions of personnel appointments. When Stalin became dissatisfied with the Commissar of Transport, M. L. Rukhi- movich, he worked tirelessly to get him replaced. Stalin's decision to fire Rukhimovich was transmitted in a letter to Kaganovich on 19 September 1931. On 25 September, the Politburo submitted three potential candi- dates to Stalin and set a meeting date. With the Politburo’s unanimous support, Stalin selected the new commissar of transport on 26 Septem- ber. On the same day, Kaganovich reported to Stalin: “Today we have summoned Rukhimovich and as soon as he appears we will deal with the question officially.”** Rukhimovich appeared before the Politburo on 1 October and was formally fired and replaced by the new commissar of transport (Politburo member A. A. Andreev), who presented his pro- posed list of deputies to the Politburo. Stalin objected that too many came from the northern Caucasus and proposed his own candidate: The Politburo approved the new management team on 5 October 1931, thus concluding the change in guard."* Thus, for approximately three weeks, the appointment of a new commissar of transport was the Polit- buro’s main focus, suggesting the extreme importance attached to nam- ing responsible and loyal subordinates. According to the Soviet principle of one-man management, edinona- chalie, the head once appointed to lead a commissariat, glavk, or enter- prise, became responsible for the results.*” Other operating procedures were left vague, but this principle was enshrined in internal NKLP de crees.** But the complexity of the organization required that the commis sar delegate considerable authority to deputies. In Ordzhonikidze’s case, his first deputy was Tu. L. Piatakov, an official Stalin suspected of “ques- tionable loyalty.”** Another deputy, I. P. Pavlunovskii (1932-33), and the former commissar of transport, M. L. Rukhimovich (1933-1936), were responsible for NKTP’s massive “special” (military) department. Respon- sibility was delegated within NKTP, but it was clear that the commissar had the final authority. Minutes from meetings of NKTP’s collegium in 1938 and 1939 under its post-purge commissar, Kaganovich (one of Stalin's old- est associates and a master of bureaucratic practices) show him in his role of final decision maker. Different points of view could be expressed in collegium meetings, but Kaganovich made the final decision, and he was 42. O. V. Khlevniuk, A. V. Kvashonkin, L. P. Kosheleva, and L. A. Rogovaia, Stalinskoe Politbiuro v 30-e gody (Moscow, 1995), 15-16. 43. Khlevniuk, Davies, Kosheleva, Ris, and Rogovaia, Stalin i Kaganovich, 111-19. 44, Tbid., 123. 45. Ibid., 194 46, Ibid., 197 47. Gregory, Restructuring the Soviet Economic Bureaucracy, 57-59. 48. Decree No. 330 from 15 April 1934 “For the Purpose of Strengthening One-Man Management in the System of Management of NKLP and the Placing of More Responsi- bility on the Directors of Institutions,” RGAE, f. 7604, op. 362, d. 1 49. At one time, Piatakov was considered a potential head of government. Stalin's hatred of Piatakov may have been associated with his fear of him.798 Stavic Review never contradicted. Any “suggestions” he made were accepted as final de- cisions. And the commissar would explode in anger in response to fail- ures. For example, in a meeting of 17 July 1937, Kaganovich personally ranted about an accident at a copper plant, heaped abuse on a number of people, and fired the director on the spot. That the manager alone was responsible for results was clearly es- tablished from the highest to the lowest levels. When the ill-fated trans- port commissar (Rukhimovich) complained that the lack of investment and deteriorating equipment were to blame for poor performance, Stalin wrote to Kaganovich in anger: “Although decrees of the Central Commit- tee have great significance, they cannot save the day. Why? Because as long as a pack of narcissistic and self-satisfied bureaucrats such as Rukhi- movich are sitting in the commissariat of transport, avoiding fulfilling the decrees of the Central Committee, and sowing seeds of skepticism—the decrees of the Central Committee will be put off until doomsday. To save the railroads, it is necessary to drive out this pack.”*! Managers could not plead that things had gone wrong, that supplies had not been delivered, or that accidents had occurred. As Ordzhonikidze stated in a lever of 16 June 1934: “That director, that engineer, that shop boss, that technical director who does not insure that the directives of the commissariat, the government, or the Central Committee of our party are fulfilled exactly is not a director.”** Ordzhonikidze derided those managers who felt that their responsibilities to the state could be avoided: “There are wise men {umniki] who think that the decrees of the commissariat and the glavks can be fulfilled or not fulfilled as they wish.”®* The Commissar of NKLP, Liubimoy, expressed a similar sentiment in 5 March 1933: “We must ac- cept that the plan approved by the commissariat collegium is the law and cannot be changed without special approval."* On 8 January 1934, Ordzhonikidze made an example of “wise men” who do not fulfill their plans by firing the director of the Yugoslav Rubber Factory, a Comrade Mikhailov, for telling a trust conference that it was impossible for him to fulfill his plan: “The plan, approved by the government, is the law. Any ar- gument against an approved plan is a violation of party and Soviet disci- pline. Any director who speaks against an approved plan cannot remain a director.” Ordzhonikidze showed little tolerance for excuses and, at a meeting of the NKTP collegium on 6 June 1932, demanded that the plan be fulfilled even under difficult supply conditions: “You get up and you cry that you do not have this or that but you never say what is necessary to correct the situation. You are placing the blame on others when you yourself are to blame.”® Ata meeting of managers on 20 September 1934, Ordzhonikidze reiterated his position: “We will not listen to those people 50. RGAE, f. 7297, op. 28, d. 4,1, 22. 51. Khlevniuk, ‘avies, Kosheleva, Ris, and Rogovaia, Stalin i Kaganovich, 109. 297, op. 38, d. 106, 1 12. 54, RGAE, £. 7604, op. 1, d. 37,1 11 55, NKTP Decree No. 32 from 8 January 1934, RGAE, f. 7297, op. 1, d. 25,1. 192. 56. RGAE, £. 7297, op. 38, d. 10,1. 4Creating Soviet Industry: The House That Stalin Built 799 who say our materials have not been delivered, but we say that a good manager, a good shop director, a good master technician knows how to organize things and produce the required results.” Further: “Our equip- ment, our plants are ready to serve the Soviet Union, ready to produce massive tons of metals. What is preventing them? Poor work."57 The clear message that “good managers know how to produce results” has far reaching consequences. It strongly suggests that a “good” manager will resort to any and all means to get the job done at any price. A man- ager who attempted to solve problems through official means was simply told to solve the problem himself. Thus superiors, ranging from Stalin to the glavk director, were clearly winking at their own rules, opening the door to a whole range of informal activities. Only the nonenterprising manager will not find “innovative” ways to solve problems. Almost by defi- nition, good managers were those who turned to unofficial channels to get things done—no questions asked by their superiors. Scapegoating, Punishment, and Reversals In theory, the task of the Soviet edinonachal'nik was impossible. He had to fulfill the contradictory and changing plans that constituted the “law of the land.” He could not object to these “laws” because they were issued “unanimously” by the highest party officials. Lacking official assistance, he either had to turn to “unofficial” channels to meet his plan or provide false information to superiors. Given that plans were by definition ratio- nally devised, the only explanation for failure was human failure, which could be interpreted as deliberate sabotage (“wrecking”). Under these circumstances, no edinonachal'nik could have a clean record or stand up toa careful examination. Yet, the supply of talented managers was limited. If all were fired for their transgressions, there would be none left. Soviet institutional arrangements therefore had to resolve a dilemma: It was nec- essary to prove that plans failed due to human failure; yet the sacrifice of the limited supply of managerial talent had to be limited to symbolic numbers.** To resolve this dilemma, the Soviet system created an elaborate ritual of blame (scapegoating), punishment, suggestion of remedial measures, and punishment reversal. The various players in this ritual usually un- derstood their roles well. Although formally responsible for results, the manager insulated himself from responsibility to insure that subordinates were blamed and punished for plan failures. Ordzhonikidze’s first deputy (Piatakov) served as a lightning rod for commissariat miscues. Deputy directors or chief engineers were more likely to pay the price of plan failure than the enterprise director. The lower the level of an “ac- ceptable” scapegoat, the better. Collegium minutes show that NKTP com- missar Kaganovich had his deputies propose major programs, while Kaga- 57. RGAE, f. 7297, op. 28, d. 334, 1. 11-14. 58, Belova, “Economic Crime and Punishment,” 139-40. 59. These matters are discussed in Getty and Naumov, Road to Terror, chaps. 4-5. 60. Gregory, Restructuring the Soviet Economic Bureaucracy, 129.800 Slavic Review novich pointed out what could go wrong and disassociated himself from potential failures. Commissariat meetings show Kaganovich in the role of critic with respect to construction matters, NKTP’s 1939 plan, and NKTP’s fourth-quarter plan for 1988.*! Stalin, the most experienced scapegoater, Jet others introduce plans and initiatives, while he sat on the sidelines as a critic and blamed others when things went wrong. Stalin turned down the position of chairman of Sovnarkom in 1930 to partially divorce him- self from responsibility for concrete results. The NKTP archives contain more than thirty massive collections of its control-inspection group, whose main task was to investigate plan failures. At the commissariat level, nonfulfillment of a plan, referred to as plan “breakdowns” (proryv), set into motion a ritual of investigation, blame, punishment, and renewal. A “blame commission” would be established to identify the reason for nonfulfillment, to punish the guilty, and to pro- pose corrective measures. Punishments ranged from rebukes (vygovor), to firings, to criminal tials, and even execution. GUMP’s July 1933 investi- gation of an accident at the Makeevskii Plant, which destroyed one of its blast furnaces, is a typical example of this ritual.** The commission found the chief of the blast furnace department and the engineer of the de- stroyed blast furnace responsible. The chief was dismissed and sent to a smaller plant, but he was promised that if this smaller plant fulfilled its plan during the next six months, he would be returned to one of the larger plants. The chief of the destroyed blast furnace, who had only re- cently arrived at the plant, was demoted to “acting engineer" and his wages were reduced by 20 percent, but he was promised that if he could repair the blast furnace within one month, he would be restored to his former position. Other “guilty parties” received severe rebukes. The man- ager of the Makeevskii Plant was not punished; he successfully shifted the blame to lower-level scapegoats. Punishments were obligatory for non- fulfillment of the plan, but they could be mild and might be reversed. And, although punishments and rebukes were recorded in the official's party record, they could later be removed. Purging the record clean was quite common, especially when the defendant had the support of a high- level patron.® The punishment game took on a more ominous tone during the Great Purges of 1937-1938. Those responsible for plan failures could be found guilty of deliberate sabotage and “wrecking.” Extreme punishment, such as imprisonment and execution, replaced the milder slaps on the wrists of earlier periods. In an inspection trip of August-October 1938 to investigate plan failures in coal mining, NKTP’s deputy director, a Com- rade Makarov, inspected various coal mines and heard reports from the field director and from directors of different mines. After evaluating these reports, he declared that mines with 35 percent fulfillment were doing “disgraceful work,” those with 40-60 percent fulfillment were doing “defi- 61. RGAE, f. 7297, op. 28, d. 4,1. 15; d. 5, I 11-17; d. 6, 1. 117, 62. GUMP’s Decree No. 138 from 7 July 1933, RGAE, f. 4086, op. 2, d. 275, IL. 46-48, 63. Belova, “Economic Crime and Punishment.”Creating Soviet Industry: The House That Stalin Built 801 nitely bad work,” and those with 85 percent fulfillment were doing “unsat- isfactory work.” Makarov identified the reasons for failure, placed blame on specific individuals, and suggested remedies. He was also authorized to levy punishment. He turned some mine directors over to the courts for punishment, fired others, but retained some managers after they pro- vided assurances that the situation would be immediately corrected. For- tunately for the mine directors, Makarev refrained from raising charges of “wrecking,” which would have spelled inevitable execution. The reverse side of punishment for plan failure was reward for plan fulfillment. In this ritual, it is noteworthy that the superior was more likely to issue the reward, while the superior’s subordinate was more likely to is- sue the punishment, at least within NKTP. While the glavk administrator was more likely to punish subordinates than the commissar, the commis- sar was more likely to reward managers than the glavk administrator. In the 1930s, NKTP issued a number of decrees that rewarded managers and other leading personnel for plan fulfillment. Directors and deputy direc- tors received cars and motorcycles; shop directors and chief engineers re- ceived bicycles and watches as well as monetary awards. Cornmissariats controlled such rewards because they feared that glavks and trusts were too ready to reward their personnel.®* Superiors versus Subordinates: Them versus Us As described earlier, in the nested Soviet dictatorship, the superior issues vertical orders to subordinates, which the subordinate either obeys or dis- obeys. In extreme cases, the subordinate might disobey the order outright; or the subordinate might disobey the order by engaging in a horizontal transaction while concealing this fact from the superior. In addition, the subordinate could lobby to influence the superior’s vertical orders, to shape them to be more suitable. The archives provide a wealth of infor- mation on all these dealings between superiors and subordinates. Perceived Obedience to Vertical Orders From the highest to the lowest levels of the Soviet administrative-command economy, there was dismay when orders were not fulfilled or were even ignored. Stalin worried openly that the Politburo could issue decrees that would either not be communicated or, worse, ignored. In a letter of 22 September 1930 to Viacheslav Molotov, he proposed establishing: “a standing commission for the sole purpose of systematically checking on the fulfillment of the center's decisions,” noting that “without such re- 64. RGAE, f. 7297, op. 28, d. 58, 1 5. 65. NKTP Directive No. 12 from 5 January 1934, “About the Rewarding of Technical Workers and Leading Workers in Factory No. 8,” RGAE, f. 7297. op. 1, d. 25, 1. 41 66. NKTP Directive No. 76 from 1935, “About Forbidding Glavks and Trusts to Re- ward Managerial Personnel of Factories and Trusts without the Approval of the Ministry,” RGAE, f. 7297, op. 44, d. 9,1. 16.802 Slavic Review forms, the center’s directives will remain completely on paper.” In an ear- lier letter of 21 August 1929, he confided to Molotov: “I am afraid that the local OGPU will not learn about the Politburo’s decision, and it [the decision] will get bogged down in the bowels of the OGPU.”® Ordzhoni- kidze recorded similar complaints: “I see, I curse, I act like an animal, but in order to deal with an issue, in order to insure that it will be done, the leadership itself must go into hysterics for 3 or 4 hours and drive to hys- terics the ones who have to fulfill the task.”® In a speech on the tenth anniversary of NKTP’s newspaper “For Industrialization,” Ordzhonikidze declared: “I would like for the editor and his associates to concentrate fire ‘on the most basic defect of our administration. Often, practically every day, we make beautiful decisions—it would be impossible for them to be better. If you take all our decisions, decrees, and orders—just fulfill them, nothing more is being asked. But with respect to fulfillment, things do not go that well. The newspaper must report every day whether our decisions are being fulfilled.” Ordzhonikidze’s own reaction to orders from above is instructive. Consider the haughty rebuff he gave to the chairman of Gosplan: “Today they gave me your order, addressed directly to the chemical depart- ment. I regard such a directive through the director . . . [not through. me] as incorrect. Therefore I request that all directives be sent in the usual order. They think that they can give the factories orders past us, but why the devil [do we] exist and why should I sit here?"” Thus, Stalin could feel that his orders were enlightened and should be obeyed, while his sub- ordinate in the vertical hierarchy, Ordzhonikidze, could conclude “that each successive order is stronger and without foundation” while praising his own orders as “beautiful.””" Subordinates could protect themselves from bad plans by writing the plans and decrees themselves. And, given the fact that superior organiza- tions above the level of the commissariat were grossly understaffed, most of the working decrees were drafted by subordinates in any case.”* NKTP’s Charter of 10 November 1937 stated that “the commissar issues directives within the limits of his responsibility to execute the laws and decrees of Sovnarkom,” but in practice more than half were signed by deputy com- missars and even by members of the commissariat’s collegium.7? The pro- 67. Lars T. Lih, Oleg V. Naumoy, and Oleg V. Khlevniuk, eds., Stalin’ Letters to Molo- tov, 1925-1936 (New Haven, 1995), 168, 217-18. 68. RGAE, f. 7297, op. 38, d. 104, 1.2 69. Ofitsiainye zadachi Narkomatou i glavkov i real'naia praktika. RGAE, f. 7297, op. 38, 4. 252,12. 70. O. V. Khlevniuk, Stalin i Ordzhonikidze: Konflikty v Polithiuro v 30-e gody (Moscow, 1993), 32. 7. Ibid. 72. Paul Gregory, “The Dictator’s Orders,” in Gregory, ed., Behind the Facade, 13-14. 73. RGAE, f.7297, op. 28, d. 35, Il. 2-14. The distribution of the workload can be seen from the distribution of decree-signing. The commissar signed fewer than half of the de: crees. First deputy Piatakov signed the most decrees and clearly directed the daily activi ties of the commissariat, Pavlunovskii and then Rukhimovich signed directives classified as secret and related to defense production. The same division applied to the glavks, where the deputy director or chief engineer could also sign directives. The director of theCreating Soviet Industry: The House That Stalin Built 803 liferation of decree-signing authority provoked Ordzhonikidze on 16June 1934 to complain: “The commissariat is issuing an unbelievable number of decrees. Virtually anyone can sign these documents. If 40 people can sign in one glavk, where will this eventually lead?” Given the lack of manpower and the profusion of decree-signing authority, commissariats and glavks prepared their own decrees, which they lobbied their superi- ors to sign. For example, NKTP in 1932 ordered its mining glavk to pre- pare a draft decree within five days about the development of the sulfur industry to submit to Sovnarkom for a signature.” Ata 8 June 1937 meet- ing, Mezhlauk ordered the Defense Mobilization Department, GUMP, and Glavspetsstal (the glavks that would have to fulfill the order) to pre- pare a decree to submit to Sovnarkom on the special steel for defense.” Such “bottom up” draft decrees were usually sent out for evaluation. For example, in February 1982, the Administration for Non-Ferrous Metals and Gold Processing (Glavisvetmetzoloto) sent to Ordzhonikidze a draft decree requesting an additional 13,800 tons of metal for the first quarter of 1932. After reviewing the evaluation of his construction department (which served as the expert in this case), Ordzhonikidze decreed the al- lotment of about half the requested amount.” Disputes between commis- sariats or glavks were sometimes resolved by the superior telling one of the disputants to prepare its decree and submit it for a signature. Games In the nested Soviet dictatorship, superiors and subordinates played games with one another wherein each level attempted to maximize its “well being,” defined broadly to include salary, bonuses, perks, and career advancement, and, important in the context of the late 1930s, to avoid “repression.” The superior organization wished to extract from subordi- nates the maximum production with the minimum expenditure of scarce resources. The subordinate wished to minimize the possibility of plan fail- ure by obtaining low production targets and ample resource allocations. The subordinate would then shift to the role of superior with respect to his subordinates, demanding a maximum production program and fulfill- ment of priority tasks, while his subordinates bargained for low produc- tion targets and ample resources. Each successive unit played the game the same way.”* glavk, however, signed a higher proportion of decrees than the commissar did for the commissariat. 74. RGAE, f. 7297, op. 38, d. 106, 1.1. 75, Decree No. 59 from 16 March 1932, *On the Question of Insuring the Production Program and Capital Construction of Trust Soiuzsevera for 1932,” RGAE, f. 7297, op. 38, 5,1. 38-40. 76. RGAE, f. 7297, op. 38, d. 304, 1. 81. 77. NKTP issued Decree No. 70 on 14 February 1982, RGAE, f. 7297, op. 1,d. 1, 1.263. 78, Belova and Gregory showed the commissariat’s practice of issuing two plans. To their enterprises, the commissariat handed down plans that exceeded the official state plan, Records reveal that the glavks played exactly the same game with their subordinates. Ina collegium meeting of NKLP of 5 March 1933, the commissar made the following com- plaint: “First of all, we must bring an end to the practice of our glavks issuing to their en-804 Slavic Review Just as commissariats were reluctant to share information with the center,” the glavks were reluctant to share information with one another and with the commissar, prompting the following outburst from Ordzho- nikidze at a conference on equipment for ferrous metallurgy: “Who is going to believe our figures if someone detects that we are giving false fig- ures on tractor production? Comrade Afanasv should punish those who deceived him with the harshest possible measures, should take them out and thrash them and throw them out. We do not need such liars. Com- rade Afanas‘ev should not go easy on these people.”*? The archives are full of tenacious lobbying by commissars, glavk ad- ministrators, and enterprise managers for lower production and higher inputs. During the formulation of the second Five-Year Plan, Ordzhoni- kidze lobbied for lower steel targets and resisted a lower investment bud- get.®! Lobbying did not cease after state plans were approved. NKTP re- ceived permission from Sovnarkom in April 1935 to reduce its targets for civilian ships following Ordzhonikidze’s letter to Molotov, which reviewed NKTP’s military and civilian shipbuilding plansand concluded that despite NKTP’s best efforts it could not meet its 550 million ruble production tar- get.* Citing the “practice of earlier years,” Ordzhonikidze explained what parts of the plan he could not fulfill and proposed shifting a substantial portion of civilian orders to 1936.*3 A corresponding draft decree was at- tached to the letter for Sovnarkom to sign (following the “bottom-up de- cree procedure” described above) .* Gosplan, which evaluated the request, reluctantly agreed, “although these obligations were placed on NKTP by special governmental decrees.”* We do not know the full story behind NKTP’s success in this instance: Ordzhonikidze’s clout, the persuasiveness of the case, or some other factor? The commissariat protected the inter- ests of its shipbuilding glavk (Glavmorprom), but this glavk likely had to prove the necessity of the reduction to Ordzhonikidze, who would have preferred not to lobby for the reduction. More often, the commissar re- buffed glavk attempts to reduce production plans. When NKTP’s Defense Mobilization Department unilaterally lowered its production targets with- out the prior approval of the commissariat, its management was severely punished. From the commissar’s point of view, the glavks were too easy on their enterprises. The stenographic report of an NKTP meeting in Septem- ber 1934 shows Ordzhonikidze complaining that glavks were allies of their terprises and trusts plans in excess of those approved by the commissariat’s collegium. This may have been allowed last year, but if it continues, it will cause an overexpenditure of funds and create a difficult financial situation. We must insist that the glavks issue plans that correspond to those approved by the collegium,” RGAE, f. 7604, op. 1, d. 137, 1. 9. 79, Belova and Gregory, “Dictators, Loyal and Opportunistic Agents.” 80. RGAE, f. 7297, op. 38, d. 9,1. 4 81. R. W. Davies, Crisis and Progress in the Soviet Economy: 1931-1933 (Basingstoke, Eng., 1996), 292-301 ‘82, For Ordzhonikidze’s letter to Molotov, see GARF, f. 5446, op. 16a, d. 84, Il 6-8. 83. GARF, f. 5446, op. 16a, d. 84, Il. 7, 8, and 6-8. 84. Ibid., 9. 85. Ibid., 3,Creating Soviet Industry: The House That Stalin Buile 805 enterprises rather than their taskmasters: “Our glavks are managing their enterprises, in my opinion, as if they were only recently separated from them. What does this mean? It means that they gather as poor beggars here in Moscow; they act as petitioners for their enterprises in order to get as much money as possible and to give their enterprises as small a pro- duction program as possible. This is not any good; there is no kind of ad- ministration in this. We are not people with such weak nerves that we can- not put our shoulders to the wheel. The glavk should lead. When factories demand from the glavk, it should examine their requests to the last detail, should give a factory a taut production program and force it to fulfill it."** Although Ordzhonikidze feared that glavks were too sympathetic to their enterprises, the records show that they usually denied requests for lower production targets. For example, GUMP denied Kosogorskii Metal Combinat’s request for lower production targets to allow necessary repairs three times. When the Petrovskii Factory asked GUMP on 8 August 1937 to lower its targets, the reply was: “the third quarter plan was approved by the government. I do not have the authority to change it. Considering the tight situation with pig iron balances, I request you take measures for the unconditional fulfillment of the third quarter plan.”*” The glavk even or- dered the delay of repairs. In October 1932, the deputy director of the Kramotorskii Factory was reprimanded for shutting down a blast furnace without permission.** The commissariat attempted to get more supplies from the center, which tried to limit what it gave. The commissariat waged the same battle with its glavks. The head of NKTP’s supply department (a Comrade Aig- khorn) provides a frank account of the commissariat’s struggle to limit re- source use in a meeting of 12 December 1937: “Our problem is that we cannot really check orders” and the ability to check them “is necessary to defeat the greedy opportunists and make the process of supply healthy... .. ‘We operate partially on the basis of historical material—we are supposed to give you so and so much in this quarter, and at the same time you are supposed to give us this much. We are supposed to go to the government with full responsibility that we are demanding the minimum from the general economic balance to insure the provisioning of this or that enter- prise. Instead, when we receive our funds, we distribute them and then we send letters to Sovnarkom saying, ‘You insult us, you gave us too little, therefore you must give us more.'"* The archives show that no one knew what materials were required. As Ordzhonikidze inquired of a subordinate (Muklevich): “Tell us please how it happened that they received supplies for 50 percent and fulfilled the production program 100 percent?” Muklevich replied: “In July, I told my people to prepare a report for the commissar about the fulfillment of plans for individual branches. I then began to edit these reports and saw 86. RGAE, f. 7297, op. 28, d. 334, 1. 42. 87. RGAE, f. 4086, op. 2, d. 3567, 1. 50. 88. Directive No. 734 from 26 October 1932, RGAE, f. 7297, op. 44, d. 1 (Prikaz 7 NKTP za 1932), 1. 310. 89. RGAE, f. 7297, op. 5, d. 2,1. 12-14,806 Slavic Review that the production program had been fulfilled 102 percent but that only 40 percent of supplies had been received. I believed there was something left over from the previous year. I looked into the report for the previous year—again 103 percent and only 40 percent of supplies. I could not look at the year previous to that because I could not find it."* The distribu- tion of materials to subordinates was based on intuition, as the director of NKTP supply reported in 1930: “We often allocate our funds in part and look how much we gave yesterday, in the last quarter, to determine the needs of the glavk. .. . We will give 100 units to one glavk, 90 to another; in the next quarter we will do the reverse and see what happens. You see we do it on the basis of ‘feel,’ there is no explanation.”*! The glavks used every face-to-face meeting to lobby for more. Puchkov, an official of GUMP, used a meeting of the Commissariat collegium on 11 May 1935 to personally lobby Ordzhonikidze: “The additional work requires that we get an additional 5 million.” Ordzhonikidze replied that all investment funds had been allocated, but Puchkov continued to insist: “They did not give [enough], Comrade Ordzhonikidze. They gave me the order and said that I had to take these resources from my own 15 million. I request, Comrade Ordzhonikidze, that you give more.”*? Joint Responsibility Even if the manager diverted blame to a scapegoat, the failure was still shared. The commissar had to be concerned about the failure of a glavk; the glavk director had to be concerned about the failure of a subordinate enterprise.°? The commissariat, glavk, and enterprise were all in the same boat. Consider the call to solidarity of | November 1933 issued by NKLP Commissar Liubimov: “You must carefully consider what kind of material you use, what kind of paint, and [you must] create a fuss [skandalif] about everything; we should create a fuss together, not going independently to the authorities but going with the commissar. I already gave you several examples of how to ask questions about materials, how to call every day until you get them.”™ On 26 June 1932, Ordzhonikidze had to remind subordinates of their mutual responsibility for ensuring adequate supplies among NKTP enterprises: “No matter how much you complain, no mat- ter what demands you place on machine building [for deliveries] or whomever else, all your demands can be sent back with complete justifi- cation because you gave no metals. . . . All your demands must be backed by your giving enough metals for their work. . . . No one is demanding that you promise mountains of gold. You just tell them what you can do and what is necessary for this. Letus then do honest battle and correct this situation."° 90. RGAE, f. 7297, op. 28, d. 335, 1. 32. 91. RGAE, f. 7297, op. 5, d. 2, Il 12-14. 92. RGAE, f. 7297, op. 38, d. 177, Il 15-16. 93. Berliner, Factory and Manager in the USSR; Granick, Management of the Industrial Firm in the USSR. 94. RGAE, f. 7604, op. 1, d. 169, 14. 95. RGAE, f. 7297, op. 38, d. 10,11 4, 15.Creating Soviet Industry: The House That Stalin Built 807 Sharing responsibility meant that glavks or enterprises were asked to compensate for shortfalls elsewhere. “Donors” were ordered to increase their supply to other units struggling to fulfill their orders. Examples in- clude NKTP's order to insure the on-time commissioning of the Lugansk Locomotive Factory, the diversion of materials to fulfill specialty steel tar- gets for defense in June 1987, or the order to Mariupol’ Steel Factory to supply the Kharkov Shipbuilding Factory.° Horizontal Conflicts Eugenia Belova and Paul Gregory have described the vertical conflicts be- tween the dictator and the managers of production as represented by industrial commissariats.” “Horizontal conflicts” are conflicts between organizations located at approximately the same level in the hierarchical structure. Although NKTP and NKLP dominated industrial production, especially NKTP, they still had potent rivals: the Commissariat of Trans- portation, gulag administration of the People’s Commissariat of Internal Affairs (NKVD), and the Commissariat of Trade/Supply, which managed enterprises that produced manufactured consumer goods. Given the over- all “limits” on investment and other resources, there was intense compe- tition among these three agencies. There was also intense competition among glavks within a commissariat. Horizontal conflicts centered on the failure to meet obligations. Com- missariats had to provide themselves with the inputs needed to meet their production targets, but they also had to supply “foreign” commissariats. “Branch patriotism” or “departmentalism” hampered the resource flows among production units.% Actual supply and delivery transactions were negotiated during “contract campaigns,” and disputes were resolved by administrative or legal means, or by informal agreements.” The archives primarily provide material on administrative and legal resolutions of dis- putes; disputes settled informally through “relational contracting” were usually not documented, although some do appear in official records. The two months of correspondence between NKLP and NKTP (from May and June 1934) show that NKLP dispatched letters or complaints to NKTP about three times per month. The small number suggests that the com- missar deliberately limited written complaints, for good reason. Commissariats were headed by national leaders (such as Ordzhoni- kidze for NKTP, Mikoian for Trade, Kaganovich for Transportation) and their disputes had to be submitted to the Politburo or Sovnarkom by the commissar himself. Such disputants could not know in advance who would win, and Politburo patience was probably limited. Thus, adminis- 96. Directive No. 96 from 22 February 1982, RGAE, f. 4086, op. 2, d. 276, Il 28-29; RGAE, f. 7297, op. 38, d. 304, 1. 81; and NKTP Directive No. 267s from 28 December 1932, RGAE, f. 7297, op. 38, d.5, 1. 310. 97. Belova and Gregory, “Dictators, Loyal, and Opportunistic Agents.” 98. Gregory, Restructuring the Soviet Economic Bureaucracy, 161; E. A. Rees, “Introduc- tion,” in Rees, ed., Decision- Making in the Stalinist Command Economy, 4 99. Eugenia Belova, “Conflict Enforcement under Dictatorship: The Case of the Soviet Economy” (Hoover Institution Working Paper, November 2001)808 Slavic Review trative resolution was probably a last resort; informal resolution would have been preferred. In 1934, NKLP could not reach a compromise concerning equipment that NKTP was supposed to deliver for two new factories. NKLP Commis- sar Liubimov wrote to Stalin and Molotov complaining: “Despite all the pressure I exerted on NKTP, I have not been able to obtain the equipment required to complete this construction on time.”!”! The archives do not contain Stalin and Molotoy’s answer, but this case at least shows the for- mat for high-level complaints. The complaining party probably had to demonstrate that he had taken all necessary measures before turning to Stalin. We know more about conflicts between NKTP and the Commis- sariat of Transport because these were particularly common. Transport wanted metals for rail construction; NKTP wanted to keep metals for its own uses. In 1934, the Commissariat of Transport demanded 46,600 tons of metal for bridges; NKTP offered half the requested amount. Sov- narkom supported NKTP by substantially reducing the Commissariat of Transport’s request.'°? When NKTP failed to deliver even this smaller amount, Sovnarkom denied its request (21 November 1934) to delay de- livery and bluntly demanded punishment stating: “Request of Comrade Piatakov [first deputy commissar of NKTP] for delay rejected. Order the control commission to punish the guilty for violating the Sovnarkom de- cree.”" Yet, despite the government's ruling, NKTP won its delay after a number of negotiations." NKTP may have had no metals to deliver, but it is remarkable that it was able to escape serious punishment, and that Sovnarkom was unable to force its most powerful commissariat to carry out its own order. This may explain why informal solutions of disputes were preferred. An example of informal conflict resolution on a quid-pro-quo basis can be found in NKLP Commissar Liubimoy’s letter of June 1934 to Ord- zhonikidze. One of NKTP’s factories was supposed to supply two vacuum pumps to an NKLP trust by the first quarter, but NKTP asked for a delay until September. Liubimov asked Ordzhonikidze to order his factory to deliver them immediately, arguing that the pumps were needed to com- plete the Balakhinskii Factory, which produced cellulose sulfate used by both NKLP and NKTP. NKLP had not been able to meet NKTP’s last or- der for cellulose sulfate, but if the pumps were delivered, NKTP would surely receive its orders.'°° Other deals took on subtle forms that required 100. Belova and Gregory have described a number of high-level disputes resolved by administrative means, where the disputing parties were an industrial commissariat and Gosplan or the Commissariat of Finance. The procedure was to form a compromise com- mission, in which each party was represented, to hammer out a resolution acceptable to all parties. In such disputes, the industrial commissariat was frequently the de facto win- ner. Belova and Gregory, “Dictators, Loyal, and Opportunistic Agents.” 101. RGAE, f. 7604, op. 1, d. 291, 1. 4. 102. GARF, f. 5446, op. 27, d. 92, 1. 24 103. GARF, £. 5446, op. 16a, d. 689, 1. 20. 104. Ibid., 1-3. 105, Disputes within a glavk were assigned to the glavk administrator. Such conflicts were to be resolved internally and not passed on to arbitration organs. Dirty linen was not supposed to be washed in public.Creating Soviet Industry: The House That Stalin Built 809 considerable trust. In May 1934 NKLP sought additional materials from NKTP for the reconstruction of its Baturin Chemical Factory, which NKLP needed to meet its textile plan. In exchange for these additional materi- als, NKLP offered to stop bothering NKTP for future deliveries of chemi- cals once this chemical factory was finished. Thus NKLP was proposing a deal that would be implemented over a long time horizon. In 1935, a dispute over a housing settlement was also resolved by the parties themselves. NKTP had built the setlement in the course of con- structing the Jaroslav!’ hydroelectric power station; later the project had been transferred to NKVD."™” Alll project materials and equipment were to be transferred to NKVD, but in a letter to Molotov, NKTP requested that “the constructed settlement be given to NKTP’s aroslavl’ Rubber Factory because a large number of the workers who constructed this settlement actually work there and are very much in need of housing,” that materi- als not listed in the government decree be given to NKTP, and that a wood-splitting combinat be transferred to the Iaroslavl' Rubber Factory. By the time the control commission appointed to look into these matters began its work, NKTP and NKVD had already reached a compromise so- lution, and the matter was dropped. Institutional Responses: Splitting Up Commissariats and Autarky Costs The 1930s began with the equivalent of one industrial commissariat, the Supreme Council of the National Economy, and ended with twenty-two industrial commissariats in 1941. During the same period, commissari- ats also increased their number of main administrations. In 1932, NKTP had thirteen glavks; in 1937, its glavks numbered thirty-seven. The “new” commissariats evolved from glavks that matured. We can offer three pos- sible explanations for the increase in the number of production organi- zations: fear of concentration of political power, technological change, and distribution of rewards (rents) to a broader number of recipients. The most common explanation is that technological change necessi- tated the splitting into smaller organizations. As the economy matured, it required a more complicated organizational structure. In 1931, the glavk for Non-Ferrous Metal, Gold, Platinum, and Rare Elements was split off from GUMP, and all enterprises subordinated to the Non-Ferrous Metals/ Gold Trust were transferred. In 1937, the glavk for Special Steels and Ferrous Alloys was split off, as were four other new glavks (ores, coke, steel pipes, and refractory materials). The archives give a sense that certain product types “matured” to the level of becoming independent units in their own right, just as certain product groups (such as textiles) “ma- tured” to the point where they could be split off to become independent commissariats. 106. RGAE, f. 7604, op. 1, d. 453, 1. 12. 107. Joint decree of Sovnarkom and the Central Committee, No. 2074 from 14 Sep- tember 1935, GARF, f. 5446, op. 16, d. 433, Il. 6-8 108. Ibid., 3-5, 4 109. E. A. Rees and D. H. Watson, “Politburo and Sovnarkom,” in Rees, ed., Decision- ‘Making in the Stalinist Command Economy, 24.810 Siavic Review Splitting organizations into smaller units (droblenie) is also the action of a dictator who fears the organization's growing political power. Lev Trotskii himself had planned to develop a power base around an all- powerful Gosplan (not the party) in the mid-1920s. The Soviet dictator- ship could not tolerate a single super-commissariat, the Supreme Coun- cil, even though it was headed by a loyalist, Ordzhonikidze, because it might have eventually become too powerful. If the dictator's power de- pends on the control of resources, a concentration of industrial power is dangerous. Ordzhonikidze threatened to resign from government ser- vice over the breakup of the Supreme Council, but it proceeded anyway. Kaganovich, a more compliant Politburo figure, presided over the final breakup of NKTP in 1939, apparently without protest. The archives con- firm the dictator's (Politburo/Stalin) consistent opposition to commissa- rial empire building. In 1935, NKTP asked Sovnarkom for permission to create its own supply departments, which would have given it better control over supply and distribution. Sovnarkom rebuffed this power-extending proposal on the grounds that it would create “uncontrollable” organs." NKTP demanded that it be given its own locomotives to handle its own de- liveries. The transport commissariat predictably won the argument noting its own severe lack of locomotives.'"! Another NKTP attempt to expand its influence was opposed even though it played. its most effective card: fulfilling defense targets. On 2 June 1935, NKTP requested that Somnarkom assign it factories producing “List 68” orders for the military, which had been placed under the Commissariat of Local Industry of the Russian Re- public. Opposed by Gosplan and the Commissariat of Local Industry, this proposal was rejected by Sovnarkom."!2 The Seventeenth Congress of the Communist Party (1934) created a special commission chaired by Comrade Sulimov, chairman of the Rus- sian republic, to transfer small enterprises from national commissariats to republic and local commissariats. The governments of the republics wished to have as many large enterprises transferred as possible. Ukraine, in particular, made numerous claims for large enterprises that were op- posed by the “donor” commissariats. The lists of enterprises to be trans- ferred provoked vocal protests from commissariats, in particular from NKLP and the forestry commissariat."3 NKLP appealed the loss of its Polygraph Institute to the Russian Republic arguing that it served national interests. The forestry commissariat argued that some of the enterprises to be transferred were quite large and served to prepare cadres and to produce exports. The archives do not give conclusive answers concerning which appeals were successful but they do show the dictator's intent to limit the power of the national commissariats. Even minor restructuring 110. GARE, f. 5446, op. 16, 4. 99. 111. GAR, f. 5446, op. 15a, d. 66. 112. GARE, £. 5446, op. 16a, d. 20. 113. GARF, f. 7604, op. 1, d. 402, IL. 4, 39 (the appellations of the Commissariat of Light Industry), Il. 11-13 (the appellation of the Sovnarkom of the Ukrainian republic), Il 24-25 (the appellation of the Commissariat of the Wood Industry), |. 30 (the appella- tion of the executive committee of the Leningrad region)Creating Soviet Industry: The House That Stalin Built sll proposals had to be approved by higher authorities, such as Sovnarkom. When NKTP proposed splitting off a new trust, Non-Ferrous Metals Scrap, from the trust Metal Scrap, the matter was turned over to Gosplan for its opinion (which was positive).!4 Another NKTP proposed reorganization was turned down in 1935 as “arbitrary” when it included a number of units that were not specifically listed in a Sovnarkom decree."!® Even in relatively unimportant disputes, the government acted to prevent one organization being strengthened at the expense of another. The subject of one dispute was a student dormitory that had not been clearly assigned when the Supreme Council was broken up. NKTP, as the stronger commissariat, evicted student tenants from NKLP’s polygraphic institute. NKLP initiated a suit with the State Arbitration Commission, which ruled in NKLP’s favor because the dormitory had belonged to it. A defiant NKTP complied with the decision only after the second demand and was required to pay a substantial fine of 7,500 rubles.!! ‘An alternate explanation for dividing organizations could be to in- crease political loyalty. Valery Lazarey has argued that the dictator consoli- dates political power by buying his subjects’ loyalty." Individuals would not be prepared to be “activists” in the dictator’s causes unless offered such “gifts.” But if the number of responsible positions is fixed (and re- tirements do not take place), the dictator's promises of advancement can- not be honored, and loyalty falters. The creation of new commissariats and glavks expands the number of high-level positions that can be staffed with loyalists who have been promised rapid advancement. The rank of commissar carried with it a number of perks, which appeared to be roughly the same for newly created commissariats. Moreover, the new commissar was now independent of his former chief. Kaganovich’s deputies never contradicted him while serving as his deputies. When they were appointed commissars in their own right, however, they immediately began to quarrel with him. We cannot test the proposition that organiza- tions were split up to create more promotion opportunities. But NKTP, which contained the “prizes” of Soviet industry, was split up at a faster pace than NKLP. This may have occurred because the lobbying for posi- tions within NKTP would have been more intense."'* That commissars and glavk administrators promoted takeovers and opposed attempts to take their own units away suggests that they had something of value to lose. The NKLP archives give one concrete example of a documented power struggle over “rents:” On 23 June 1932, the trust Union-Kino (Soiuzkino) protested to Stalin and Kaganovich that NKLP was trying to replace them with a commissariat administration and that NKLP wanted to get the 114. GARE, f. 5446, op. 16, d. 68. 115. GARE, f. 5446, op. 16, d. 115. 116. GARF, £. 5446, op. 16, d. 100. 117, Valery Lazarev, “Evolution of the Soviet Elite and Its Post-Communist Transfor- mation” (paper presented at the conference “Initial Conditions and the Transition Econ- omy in Russia,” University of Houston, Houston, Texas, 19-21 April 2001). 118. Andrei Markevich, Report No. 3, “The Ministry of Heavy Industry in the 1930s,” University of Houston Working Paper, 2000.812 Slavic Review money.!!® NKLP denied that it was only interested in the money and in- sisted that it was simply considering this question and would listen to Soiuzkino’s views. Soiuzkino was opposed to any kind of control whatso- ever. We do not know how this dispute was resolved, but it reveals the churning battle over control of valuable resources, such as cash earnings. !”° Granick and others have characterized the mature Soviet economy as having an extremely autarkic industrial structure.'#! For example, ma- chinery producers produced their own metals rather than buying metals from metal producers. Granick has argued that the price of this autarky was a decrease in efficiency, loss of economies of scale, and lack of special- ization. The splitting up of commissariats and glavks in the early 1930s cap- tures the birth of these autarkic tendencies. As long as metal-producing enterprises were concentrated in one glavk, that small “stationary-bandit” glavk director could manage metal production in the interests of the whole glavk. Once metal producers split off into separate glavks, the two glavk directors had separate agendas and fought against each other. After spe- cial steels was split off into Glavspetsstal from GUMP in 1937, the two glavks engaged in pitched battles over supplies and the distribution of output. Each continued to produce some of the same types of products, such as steel ingots, for example, and they supplied one another with metals. Glavspetsstal was the second largest producer of steel ingots. GUMP, the largest producer, was in charge of production planning and was supposed to Coordinate ingot production. GUMP and Glavspetsstal had frequent conflicts. In the second quarter of 1937, Makarov of Glavspetsstal informed Babaey, the deputy director of GUMP, that its factory Zaporozhstal was unable to supply GUMP enterprises with steel ingots according to plan, because “the Zaporozhstal’s metal balance . . . was extremely unfavorable” and these ingots would be necessary to fulfill Zaporozhstal’s own plan. NKTP protested that Glavspetsstal’s actions were common, that Glayspets- stal “engaged in outrageous behavior in the question of metal supply” and allocated metal to its own enterprises at the expense of “foreign” en- terprises and reminded commissariat authorities of Glavspetsstal’s habit of fighting for low plan figures for its own enterprises at the expense of higher production targets for GUMP." Ordzhonikidze particularly re- sented glavks that did not meet their supply obligations to “foreign” glavks within NKTP. He especially loathed a certain GUMP official, Dukarevich. “Dukarevich is an entirely rotten and shady person. When people go to him for supplies, he only answers—we do not have anything. We cannot give anything.” 119. Soiuzkino, a powerful, independent organization responsible for Soviet film making and important to the dictator as a source of propaganda, also generated revenue. 120. RGAE, f. 7604, op. 1, d. 129, |. 15. Correspondence with the Central Committee, Politburo, and Central Executive Committee of the Russian Republic on the production activities of light industry. 121. David Granick, Soviet Metal Fabricating and Economic Development (Madison, 1967) 122, RGAE, f. 4086, op. 2, d. 3566, 1. 11. 193. Ibid., 9-10. 124, RGAE, f. 7297, op. 38, d. 106,1. 1Creating Soviet Industry: The House That Stalin Built 813 Conclusions This description of the Soviet industrial commissariat of the 1930s will come as no surprise to such historians as David Shearer, Oleg Khlevnyuk, A.E. Rees, Derek Watson, and others who have examined the Soviet state and party archives and whose work has dispelled the myth of harmonious central planning, with a center issuing enlightened orders that loyal com- missariats and subordinated enterprises fulfill. What is of interest here are the questions being asked. Economists are primarily interested in the efficiency of institutional “working arrangements.” Unfortunately, few clear measures of institutional efficiency can be gauged from qualitative archival information. One standard might be the degree of obedience to a dictator. But if the commissariat’s “success criterion” were nonoppor- tunistic obedience, it would fail miserably as an institution. A persistent principal /agent conflict characterized the relationship between dictator and commissariat that followed from the commissariat’s requirement to “fulfill the plan” and from the commissariat’s information advantage. The opportunism of the industrial commissariat, its main administrations, and its enterprises can be seen everywhere. The commissariat behaved to- ward the dictator as its enterprises behaved toward it. Capacity was con- cealed, excessive inputs were demanded, and information was hidden, even though at least one of these commissariats was headed by a Politburo member who should have had broader interests. The Soviet commissariat operated largely without formal rules, but its working arrangements were well understood. Its one-man manager was theoretically responsible for results but was able to divert blame to subordinates. The number of experienced subordinates was limited, though, so their sacrifice for “plan failure” was often ritualistic. “Good managers” knew how to fulfill the plan; excuses were not accepted; so horizontal dealings were tacitly en- couraged. Superiors were plagued by inadequate information; resources were allocated by intuition rather than by the scientific coefficients of the Soviet planning literature. This study shows Zaleski’s “resource manage- ment” in operation—the manner in which resources were shuffled in re- sponse to petitions, complaints, and arbitrary changes from the center. It appears that the true weak point of the Soviet system was supply. Most of the anecdotes cited here relate to the struggle to get units to supply, not to get units to meet production targets. Production may have been easier to monitor; supply was more difficult to follow, and distribution was ham- pered by branch loyalties. Supply disputes clearly show that production units were divided into “us” versus “them.” Units in the “us” category were to be supplied first; “them” enterprises were to be supplied last, if at all. The dictator and commissar had to fight against this tendency. The dictator consistently opposed ministerial empire building, no matter how trivial. The long-term process of splitting up commissariats was most likely motivated by the dictator’s desire to inhibit the growth of potential rivals. Yet the process of splitting up created smaller and smaller groups of “us.” To a production unit (a commissariat, glavk, or enterprise) with a narrowly defined production profile, virtually all of the economy814 Slavic Review was made up of “foreign” units. Reliance on “foreigners” for supplies be- came dangerous, and producers at all levels attempted to become as self- sufficient (autarkic) as possible. An autarkic Supreme Council of the Na- tional Economy, which managed virtually all of industry in 1930, would be less inefficient than an autarkic commissariat of defense industry in 1938. An autarkic administration for metals industry would be less inefficient than an autarkic administration for specialty steels. The working arrange- ments bred autarky, but the costs of autarky rose as administrative units were broken up into increasingly smaller units. Gosplan, the dictator's main representative in such matters, was of little help, for it wished to re- main above the fray and to plan above the operational level. The State Committee for Material Technical Supply (Gossnab) founded in 1949 was supposed to be the long-term solution to the supply problem, but by the early 1950s, the same conflicts between suppliers and users were already emerging. During the 1930s, three quite different “jockeys,” to use Berliner’s term, ran NKTP: Ordzhonikidze was a key member of the ruling elite with a fiercely independent streak; the short-lived Mezhlauk was regarded as a technician who had risen from the ranks of technical specialists; Kagano- vich was also a major political figure who had risen to the top as Stalin's lackey. Despite their differences, they all appeared to follow the same principles in running the commissariat, although the commisssariat func- tioned largely according to informal rules. With respect to the way the industrial commissariat (Berliner’s “horse”) performed, the jockey did not appear to matter. More than this, jockeys basically duplicated the behavior of their superiors, and each unit ‘was organized and operated as its superior unit. When Stalin's Great Ter- ror of 1937-38 wiped out virtually all of the jockeys, they were replaced with young, upwardly mobile leaders without any apparent change in the way the system operated.