Sovnarkhoz

Origins

At the February 1957 Central Committee plenum Khrushchev proposed abolishing branch ministries and transferring enterprises to the regions. First Deputy Premier Pervukhin, Molotov, Kosygin and others opposed the plan, but Khrushchev prevailed and the Supreme Soviet decision that followed created the sovnarkhozes. A mounting budget deficit in the mid-1950s was one motive for the reform. In 1958 Khrushchev combined the party leadership with the chairmanship of the Council of Ministers (February 1957, March 1958).

Organization and scale

Of the 37 union and union-republic industrial and construction ministries, 25 were abolished in 1957 and their enterprises were transferred to the sovnarkhozes; the remaining ministries kept planning and technical-level functions. The USSR was divided into 105 economic administrative regions, 70 of them in the RSFSR. Sovnarkhozes were subordinate to the councils of ministers of the union republics, and their chairmen held the rights of a republic minister. Initially collegial bodies with small staffs, they later expanded with branch and functional departments; the Sverdlovsk sovnarkhoz, for instance, oversaw more than 400 industrial enterprises.

Recentralization and abolition

Centralization began in 1960; in November 1962 a USSR Council of National Economy was created and regions were merged, cutting the number of sovnarkhozes from 105 to 43. In March 1963 a Supreme Council of the National Economy (VSNKh) was set up under the Council of Ministers. Khrushchev was removed in October 1964, and in September 1965 the Central Committee plenum decided to return to branch management; the Supreme Soviet then legislated the abolition of the sovnarkhozes and the restoration of industrial ministries, opening the way for the Kosygin reform.

Assessment

The reform brought management closer to production but disrupted vertical branch ties, and the separation of research and design bodies from regional enterprises fragmented technical policy. The command-administrative character of the system was unchanged, while responsibility for economic development passed from central to local bodies. Amid centralized planning and the absence of market mechanisms, local autarky grew and economic growth slowed. The period also brought expanded housing construction, wages and pensions for collective farmers, and higher national income, but in 1963-64 gold sales surged, food supply worsened, and workers' protests including the Novocherkassk events were suppressed.