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Soviet Economic Strains

March 11, 1955

Report Outline
Soviet Leadership and the Soviet Economy
Economic Weakness in Agricultural Sector
Russia's Industrial Strength and Weakness
Special Focus

Soviet Leadership and the Soviet Economy

New evidence bearing on the economic strength and the economic weakness of Soviet Russia has been coming to the surface since last month's upheaval among the country's leaders. The ousting of Georgi Malenkov from the premiership on Feb. 8, by the faction headed by Nikita Khrushchev and Marshal Bulganin, exposed to the world inner tensions that had been building up in the Kremlin since Stalin died two years ago.

Statements and confessions of the divided leaders not only revealed a continuing struggle for power among Stalin's heirs but also told much about the nature of the conflicts involving Russia's basic strategy in domestic and foreign policy. Decrees issued by the Central Committee of the Communist Party a few days before Malenkov's demotion threw new light on the “unsatisfactory condition of Soviet agriculture” and disclosed strains in other less publicized sectors of the economy. The Soviet budget for 1955, unveiled before the Supreme Soviet on Feb. 3, gave concrete evidence of the extent of the shift from Malenkov's “soft” policy of more consumer goods to Khrushchev's revival of the “hard” Stalinist line based on forced expansion of heavy industry, with chief emphasis on steel and armament production.

Basic Factors in Shakeup of Kremlin Leadership

Economic factors played an important, if not a decisive, part in the overturn of Malenkov. The record as a whole includes convincing evidence that Malenkov's position was undermined after Stalin's death not merely by personal or factional rivalries but also by clashes over basic economic policies involving management of heavy and light industry, promotion of labor productivity, and development of major resources. There is less convincing evidence that conflicts over the rate of expansion in heavy industry were decisive in the final showdown. However, there is no real support for the official Soviet explanation that Malenkov's resignation resulted from his failure as an administrator or from his inability to solve the chronic problems of state-controlled agriculture.

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