less than Bathrach as the United States.
of 366 as the United States. In spite 3 of 3§K
devotes a larger proportion of total output to reconstruction and expansion. She also devotes a proportion 60 per cent, higher than the United Kingdom to the production of defence goods* (8 as against 5 per cent.). The proportion devoted to consumption in the U.S.S.R. is therefore correspondingly small. Nevertheless, considerable efforts are being made to increase the standard of living of the Russian people, although quality is inevitably sacrificed to quantity and the standard of consumption is far below the levels considered reasonable in Western Europe.
5. In both the U.S.S.R. and the United Kingdom the rate of economic expansion, as measured by the proportion of national income devoted to net investment, could be increased by 35-40 per cent. if there was no production of armaments.
6. The conclusion of this analysis is therefore mainly negative :
(i) The relative economic weakness of the U.S.S.R. and its allies compared with the free world is not proportionate to the influence they are able to wield abroad in other ways.
(ii) The people of the U.S.S.R. have long been conditioned to a low level of consumption and a higher proportion of current output can therefore be devoted to net investment and armaments than in the United Kingdom. There is no reason to think that this is causing economic difficulties inside the Soviet Union, especially as economic recovery is bringing some increases in standards of consumption to the population, and the existing régime is so powerfully backed by an iron dictatorship that political difficulties can be completely ruled out.
Methods of Comparison
7. The comparison of the industrial potential of the U.S.S.R. with that of other countries can be conducted in three ways: (1) Direct comparison may be made of the output of specific basic commodities: (2) Comparative estimates may be made of the total volumes of output: (3) Comparisons may be made of the distribution of the national incomes of countries between various types of pro- ductive activity. It has been found that each of these methods throws some light on the extent of armaments and other defence goods production in the U.S.S.R. in relation to the total economic effort. They will therefore each be considered in turn.
Production of Basic Commodities
8. Estimates of the production of basic industrial goods in various parts of the world in 1948 are given in Appendix I. The areas chosen are to some extent arbitrary (e.g., North China is included in the "Soviet Bloc " and South China excluded), but virtually no difference is made in the general picture by making slightly different assumptions, since the production of these basic com- modities by the marginal" regions is negligible. The result which emerges is that, judging by this criterion, the Soviet industrial potential is still comparatively small.
9. A comparison between the output of basic commodities in the "Red Bloc" and in O.E.E.C. countries shows that according to this criterion O.E.E.C. countries are relatively well placed.
Output in 1948
Coal
Oil Steel
Copper
Aluminium
Nitrogen
...
: :
Red Bloc
100
100
100
100
100
100
100
O.E.E.C. countries and their dependent overseas territories
115
200†
162
180
147
250
188
Sulphuric Acid
defence goods" is taken to cover those goods and services covered
by defence expenditure other than the pay, allowances and maintenance of service personnel.
* Throughout this paper
3707age 137 of 366
†
production of companies in the Middle East and elsewhere,
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4
Page 138 afternatively, we consider the combined sources of the Common-
138 366
wealth, the United States and the rest of America (but exclude Continental Europe), the preponderance over the "Red Bloc" is still more striking :-
Commonwealth, United States and rest of America
Coal Oil
Steel
Copper
Aluminium
Nitrogen
Sulphuric Acid
Red Bloc "
100
100
100
100
100
100
100
227
1,304*
406
590
538
300
400
11. So far as the immediate future is concerned, no significant change is likely to take place in this balance. Estimates for production in the "Red Bloc" can be made up to 1950 (the last year of the current Five-Year Plan). By then Soviet production will have increased beyond the 1948 figures, but not at a rate substantially greater than that planned by O.E.E.C. countries. No reliable fore- casts are available of production in 1950 in America or in Commonwealth countries other than the United Kingdom, but it is certain that the figures given in paragraph 10 will not be significantly modified by 1950.
66
12. If we look further ahead, the only Soviet figures available are the "tentative goals" set by Stalin in 1946 for Soviet production of coal, oil and steel, which might be attainable after 3 five-year plans if not more.
If we assume that these targets are attained in 1960, we can compare possible "Red Bloc production of coal, oil and steel in that year with the production of O.E.E.C. countries in 1952-53 and of the United States and Commonwealth in 1948.
>>
"Red Bloc "
1960
Coal Oil
100
100
Steel
100
O.E.E.C. countries and their dependent overseas territories
1952-53
78
179†
United States and Commonwealth
1948
127 774†
91
160
13. These comparisons of industrial potential based on a few of the most important materials do not, however, give much indication of the relative strengths of the military establishments which these groups of countries could support. This is partly because their basic materials are equally useful for war and civilian purposes and can relatively quickly be switched from the latter to the former, but also because the minimum amount of each commodity which must be employed for non-armament purposes to keep an economic system alive varies greatly according to the nature of that system.
14. This may be illustrated by taking the case of steel. In 1940 the U.S.S.R. produced 18.3 million tons of steel, of which 800,000 was allocated to ammunition: production, leaving 17.5 million tons or 88 kg. per head for civilian and general armament purposes.
In 1943 production had fallen to some 8 million tons, supplemented by imports which directly and indirectly increased supplies by 3.6 million tons. Of this no less than 24 million tons was allocated to ammunition, leaving 9 million tons or about 70 kg. per head in "unoccupied U.S.S.R." for civilian and general armament purposes. There is no reliable estimate of the consumption of steel in armaments other than ammunition, although it may be said that in war-time ammunition consumption of steel is over 50 per cent. of total armament consumption of steel. From this it may be deduced that steel consumption to-day by the armament industries proper is not likely to be much more than 10 per cent. of total steel consumption for all uses.
15. In general it may be said that economic systems which are more highly industrialised require a much higher consumption of steel per head of population
Pagdunfraction of companies in the Middle East andage &‚of 366
Including the production of controlled companies.
if they are Page Hep going6 The following figures show stedPages lap t Of 3 H H head of population in certain countries at various times :--
Steel Consumption per Head in Kilog.
United Kingdom (1890) 100 United Kingdom (1900) 120 United Kingdom (1929) 220 United Kingdom (1948) 300
United States (1890) 70 United States (1900) 130
United States (1929) 480 United States (1948) 590
U.S.S.R. (1932) 36 U.S.S.R. (1940) 95 U.S.S.R. (1948) 90
Europe, excluding U.S.S.R. (1947) 91
So far as steel consumption goes, the U.S.S.R. to-day appears to be at the stage reached by the United Kingdom and the United States 50-60 years ago. While this implies comparative industrial weakness, nevertheless it carries with it a certain advantage. Since the system is better conditioned to carry on with a low consumption of steel, a larger proportion of output may, in case of need, more rapidly be switched directly to armament production.
16. Similar considerations apply to the other basic industrial materials, although there are no reliable clues from which we can calculate the amounts of them which are used directly for armaments production in the U.S.S.R. All that can be said is that the comparisons given can do no more than indicate the total amount of certain types of industrial output which, given proper use and time, might be mobilised for war production.
Comparisons of Total Output
17. The effective economic strength of a country is best measured by its total output rather than by its output of selected basic materials, since such a measurement takes account of the skill of its labour force, its trading position, and similar factors. Such a measurement may be either in terms of labour power on the basis of the size and the efficiency of the labour force, or in terms of the value of output in terms of national currency. But this leads to great difficulties in making international comparisons, since assumptions have to bẹ made either about the relative efficiencies of labour or about the relative real value of currencies in various countries. However, Soviet statistics are frequently misleading and great care has to be taken in their interpretation. The statistics which follow must be regarded therefore as tentative, although it is believed that the general picture which they show is reasonably correct. In these paragraphs the comparisons will be limited to the U.S.S.R., the United Kingdom and the United States.
18.
The industrial working populations of the U.S.S.R., the United Kingdom and the United States in 1948 are estimated to have been as follows (in millions):
Mining
-Construction
Manufacturing industries
Other industrial occupations
and transport
U.S.S.R. United Kingdom United States
0.8
0.8
1.0
2.2
1.4
2.6
11.7
7.4
17.8
15.7
8.9
30.6
So far as manufacturing industries are concerned, it has been calculated that output per head in the United Kingdom was, before the war, just under half what it was in the United States, and that this relationship has not substantially changed. In 1937 the Russians claimed that their output per head in industry had already caught up with that of the United Kingdom, but it is probable that this claim, even if true, applied only to a limited range of products, and the most commonly accepted American estimates give output per head in the U.S.S.R. at some 40 per cent. of that in the United States. Comparisons for mining, construction, transport and services are not satisfactory owing to wide variations of conditions. Our estimates of comparative total outputs in manu- facturing industries in 1948 are therefore approximately :-
U.S.S.R. United Kingdom Pageteg Stafez66
100
80
Pågle 139 of 366
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