According to the Central Intelligence Agency, we almost reached communism by 1980

In the aftermath of World War II and the post-war reconstruction effort, the Soviet Union was beginning to look beyond reconstruction following the devastation of the world war to describe, in terms of concrete practical steps, the material conditions it had to meet to transition to a fully communist society.

How it tried to get there and why it failed has never been explained until now.

Part One

In 1950, Stalin, gave his ideas on what it would take for the Soviet Union to transition from socialism to communism. Living standards had to be doubled and hours of labor had to be radically reduced:

“It would be wrong to think that such a substantial advance in the cultural standard of the members of society can be brought about without substantial changes in the present status of labour. For this, it is necessary, first of all, to shorten the working day at least to six, and subsequently to five hours. This is needed in order that the members of society might have the necessary free time to receive an all-round education. It is necessary, further, to introduce universal compulsory polytechnical education, which is required in order that the members of society might be able freely to choose their occupations and not be tied to some one occupation all their lives. It is likewise necessary that housing conditions should be radically improved, and that real wages of workers and employees should be at least doubled, if not more, both by means of direct increases of wages and salaries, and, more especially, by further systematic reductions of prices for consumer goods.

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Only after all these preliminary conditions have been satisfied in their entirety will it be possible to pass from the socialist formula, “from each according to his ability, to each according to his work,” to the communist formula, “from each according to his ability, to each according to his needs.”

This will be a radical transition from one form of economy, the economy of socialism, to another, higher form of economy, the economy of communism.”

If communists remember 1956 for anything, it is the secret denunciation of Stalin by Khrushchev. What they likely do not realize is that Khrushchev’s repudiation of Stalin did not extend to Stalin’s ideas on hours of labor and communism. Starting in 1956, the USSR began a scheduled reduction of hours of labor that, if completed as planned by 1968, would cut the work week from 48 hours to 30 hours and double the minimum wage from 250 rubles to more than 600 rubles.

The reduction of hours of labor was seen as an essential part of a transition to communism that could be accomplished perhaps as soon as 1980.

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By 1961, the CIA seriously was concerned that the Soviet Union was well on its way to reducing hours of labor without affecting its defensive military posture against the United States. The original assessment of the Soviet effort to reduce hours of labor as part of a deliberate effort to transition to communism is on the CIA website. A followup to the original assessment, by David Bronson at Columbia University in 1968, can be found here.

The Central Intelligence Agency reviewed the program in 1961. Their interest was to uncover the motivation of the Soviets for reducing hours of labor in the middle of the cold war. And to assess whether such a bold program could be realized without compromising the Soviet defense effort. The CIA’s interest in the motivation of the Soviets in pursuing a planned reduction of hours of labor was based on the assumption that as workers supplied fewer hours of labor to the Soviet central plan, it should become harder for the Soviets to maintain its defense effort. Why would the Soviets deliberately undertake a program that, if successful, virtually guaranteed a less robust defense program?

The CIA analysts acknowledged that reduction of hours of labor was a long term position of the communist movement. It was clear that the Soviets had long pursued this sort of reduction since the earliest efforts to establish an eight hours day. And it was clear that the leadership of the Soviets under Khrushchev described communism in terms of a working day of no more than 3-4 hours by 1980.

To give you an idea of how bold Soviet ideas about the length of the work day was at the time, a three hours work day is roughly what Keynes predicted the UK could achieve by 2030. Khrushchev was proposing that the Soviet Union could reach Keynes’ target fifty years earlier than an advanced capitalist industrial power. Thus, the establishment of a thirty hours work week would have had great propaganda value for the Soviet system against the West.

Despite the obvious historical, political and ideological value of a drastic reduction of hours of labor as was planned, the CIA analysts assumed the reduction would have costs in terms of the pace of Soviet defense construction. Why were the Soviets willing to pay this cost? Were there factors influencing the pace of Soviet defense construction that Washington had not bargained on when it started the Cold War?

The shocking implication of the Soviet planned reduction of hours of labor is that it suggested the SU could effectively match the US expenditures even as its reduced hours of labor; that the SU had vast resources to call upon such that it could match US military spending AND continue to cut hours of labor in its march toward full communism.

This implied that the SU was fighting the US with one hand behind its back.

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What the CIA found was that a reduction of hours of labor rather than being an impediment to production actually spurred production. By reducing hours of labor, say the analysts, the SU was able to solve a number of problems it could not solve previously:

“Soviet managers have been forced to make beneficial but formerly neglected changes in methods of operation, thereby sharply raising efficiency in the nonagricultural sector with a minimum amount of new investment. Finally, the shorter workweek, together with the higher hourly pay, has helped to relieve the pinch of the tightening urban labor market by providing a particular inducement for housewives and young people to seek employment.”

The SU had a huge hidden reserve of labor power that took the form of massive inefficiencies in the employment of labor in production and a huge industrial reserve of mostly women workers. By cutting hours of the already employed workers, the Soviets forced managers to employ labor more efficiently. It also attracted women into production who could not work the longer hours. By forcing managers to introduce new technology and new methods of production, the Soviets had tapped additional productive potential at little or no additional cost to the state plan, and thus at low or no cost to its defense construction.

According to the CIA, these hidden labor reserves took the form of the lack of “synchronization of production flows, better allocation of primary and secondary workers, and the elimination of idle time apparent in many time-and-motion studies … to reduce tardiness of employees and “down-time” on machines.” It also took the form of managers who hoarded labor “to insure themselves against underfulfillment of the output plan by maintaining a reserve of labor and other inputs for use toward the end of the plan period or for the fulfillment of other lucrative priority output goals.”

By reducing hours of labor, the Soviets were ‘draining the swamp’, so to speak; forcing managers to release their labor reserves.

Amazingly, even as it was reducing hours of labor the state also reduced its military by more than a million troops. The Soviet Union could boast that it was able to roughly match the US pound for pound in military power even as it reduced hours of labor for workers.

Contrary to many Marxists today who argue the SU could not reduce hours of labor because of its defense needs, the CIA at the time worried the SU had proven both could be done simultaneously.

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You can almost feel the confusion of the CIA analysts trying to make sense of the reduction of hours of labor:

“In view of the regime’s apparent penchant in the past for ever expanding output of physical goods at maximum rates, any action that substantially reduced the potential for increased output might be regarded as irrational.”

This is the understandable confusion of a group of analysts who conflate the production of use values with the production of value. The magnitude of value production is a function of hours of labor, while the production of use values has no necessary relation to labor. It is thus possible (at least in theory) for the production of physical output to increase even as the labor time expended on this production is rapidly decreasing.

Operating from the premises of a monetary economy, in which physical output is measured in money terms, the CIA analysts were not equipped to analyze a planned economy. Thus, it appeared to the analysts that the SU was “foregoing” potential output in order to “pay” for free time. They return to this issue again and again; wondering if the reduction of hours of labor is a “costless or low cost good”.

To give an example, of what I mean, if after a reduction of hours of labor the shoes sector could still produce enough shoes to supply the entire country, the typical capitalist would ask himself, why should production stop there? Why shouldn’t labor continue until twice as many shoes could be produced as the country needed?

In a money economy, these additional shoes would take the form of profit for the shoe sector. But this profit only existed in ideal form, as a mass of shoes that now had to be sold for money. Basically, to realize the additional shoes as profit, the SU had to export shoes to other regions of the world market.

However, under the conditions of a closed, planned economy, having achieved self-sufficiency in shoes, the SU had no choice under the plan but to end production at the point where the need for shoes was satisfied. Additional labor time in the shoe sector had to be set free.

To the CIA analysts, however, this cessation of production at the point where the need for shoes were satisfied appears as foregone output. The time freed in the form of “leisure” appears as the cost, in terms of forgone output, of this “leisure.” They spent a lot of time trying to understand the economic logic behind the soviet program:

“[The] regime may have been aware of the costs of the program at some point in the process of policy formation but was willing to forego the potential increase in output in order to move toward the goal of increased leisure, to check the potential for rapid wage increases by altering work norms, or to crack the whip on Soviet managers. Alternatively the regime may have mistakenly evaluated the program as one without costs.”

In their view, the SU was either choosing to pay this “cost” for propaganda or ideological purposes or was using reduced hours as an administrative weapon to force managers to use labor more efficiently; to mobilize the hidden labor reserves in enterprises.

Free time as an end in itself, as communism, did not exist for the CIA analysts, who only could conceive of free time as lost output.

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According to the CIA analysts, the Soviet reduction of hours of labor passed to two periods and was rapidly approaching a third. The first period resulted in the improvement in the efficiency in the employment of the existing pool of labor power. The second period was characterized by the increased participation of women and youth in production.

In the first period, then, the reduction of hours forced enterprises to tap their hidden reserves that existed in the form of hoarded labor power. This meant additional output could be achieved without any additional expenditure of wages. It was essentially costless because wages were already being paid, but the workers idle. In the second period, by contrast, and particularly in light industry, maintaining or increasing output was achieved by additional employment.

Thus, reduced hours of labor in periods one and two had the effect of both increasing efficiency and increasing employment. These two effects have been theorized by many proponents of reduced hours of labor today and appear confirmed by the Soviet experience.

But there is a third effect of reducing hours of labor that is not mentioned in the analysis: shorter hours allows for workers to maintain a higher intensity of labor since this higher intensity must be maintained for a shorter period of time. While the analysis does not directly address this problem, the analysts do note that opposition to higher production targets (speedup) considerably declined after hours of labor were shortened.

The labor force was being worked more intensively, but the duration of this labor was considerably shortened.

Taken together, the efficiency, intensity and employment effects were predicted by Marx’s theory and discussed in Capital, v. 1 ch. 15. The Soviet experience thus proved Marx’s contention that the density of the labor day could be increased by working fewer hours. More could be produced in less time than had been produced formerly with longer hours of labor.

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The real problems the Soviet Union faced in making the transition to communism did not arise until the third period.

I will talk about that next.