Protectionism in Russia

In the 1920s, actively alters the structure of foreign economic relations on the principles of a state monopoly. Established in 1923, the People's Commissariat of Foreign Trade has received the fund to trade, that is, he has ceased to be a mediator, and has become a household purchasing and vending machine. Narkomvneshtorg empowered to individual institutions to permit the purchase of goods, but subject to approval of their contracts. Although the decree of the Central Executive Committee of 13 March 1922 Centrosoyuz allowed to sell their billet overseas cooperative organizations under the control of the People's Commissariat, the main subjects of foreign economic relations are directly subordinated to the sales offices.

 

By keeping the commanding heights of the economy could quickly turn the NEP and go for total nationalization of the economy and the implementation of the industrialization of the recipes of Marxism-Leninism - through the development of heavy industry. Foreign monopoly socialist state under these conditions proved to be extremely effective in the implementation of the relevant units. It was no longer just a "shield and the fence. young socialist industry "33. It has become the most effective tool of foreign trade expansion, as it allows a clear line of conduct chosen, regardless of the consequences for the national economy and foreign economic sphere. Occurred in the late 1920's - early 1930's abrupt change of course in foreign trade (and of course in foreign policy) area of ​​the NEP meant a transition from a semi-open (or semi-closed) to a policy of self-reliance, in essence, self-isolation. At the heart of the new course lay the ideological thesis of the antagonism between the two systems and - allegedly temporary - the necessity of the existence of a hostile environment. "Iron Curtain", which began to speak in the late 1940s, in fact, extends another in 1930, when the country has developed a specific atmosphere of the Soviet xenophobia - the mentality of the inhabitants of the "besieged fortress".

 

With the abandonment of the convertibility of gold pieces (in 1928) began a rapid decline in its real exchange rate. Although nominally in the period of the gold pieces from 1922 to 1947, he was the so-called "gold content" remained the same, really against, for example, the U.S. dollar it depreciated in the first half of 1930 to 2.5-3.5 raza34. With the transition to self-imposed isolation in the country immediately there was a shortage of consumer goods, including mass market. Imports declined rapidly (in 1938 amounted to only 1%), as well as domestic production, and a range of industrial products and food were available only in stores Torgsin (1931-1936.), Where they were exchanged for "currency values "(gold, silver, precious stones, antiques, cash currency). Accordingly, in this period there was an abyss between the so-called "foreign currency" ruble to be used as a unit of account in the foreign trade statistics, and internal ruble, which citizens can (if you can) to acquire a very limited list of goods and services, determined at the discretion of the authorities. In this period was rationed food distribution among the population. Given the hidden inflation, coupled with a deficit of most goods and services, the real purchasing power of the domestic ruble decreased during the period of collectivization and industrialization over the period of the NEP no less than six times. And as nominal incomes remained virtually the same, we can assume that the standard of living has decreased in the same proportions. This is the real price of socialist industrialization.

Due to the sharp reduction in price of labor as a result of including multiple of the devaluation of the ruble Soviet regime was able to move to an active dumping in foreign markets, to deal with that country with free trade have not managed to find effective countermeasures. Foreign entrepreneurs for the first time not only had to reckon with the massive supply of products produced with extremely low costs to pay for labor or even requisitioned, but also to deal with the so-called "trading in the state" - a counterparty with unprecedented mobilization potential.

 

Beginning of a campaign against the "Soviet dumping" and use in the USSR "forced labor" was initiated in 1930 a series of articles in the newspaper "New York Evening Post," the threat of the "red trade." After that, the United States issued a series of administrative and customs regulations, openly directed against the Soviet goods of the areas where it was used prison labor. In France, October 3, 1930 a decree was issued, to introduce a system of import licenses for major Soviet goods. England in April 1933 imposed an embargo on 80% of Soviet exports of goods.

 

However, as rightly pointed out that the authors of the Soviet period, "any attempt at discrimination of our trade Soviet Union, relying on the state monopoly of foreign trade, inflicted with such force back, that our opponents quickly sobering" 35. Countermeasures Soviet side - to limit or ban the importation of goods from countries that "discriminate against" Soviet goods - have provided a much more profound effect on the Western democracies. Suffice it to mention one reason for the inequality

 

forces: the governments of these countries, in contrast to the Soviet government, were required to be responsible for making any radical decisions, especially during the crisis erupted. At the same time, the Soviet government in the development and implementation of its economic policy, including in terms of foreign trade, could afford to not only consider the opinion of the population, but also to ignore its most pressing needs.

 

During the Soviet period, foreign trade results of the socialist industrialization of the 1930s received only positive evaluation. In an article in the TSB deputy minister of foreign trade in 1960 - 1970 years of the VS Alkhimova, in particular: "Important changes have occurred in the structure of foreign trade. In the years 1937-1938 the share of imported machinery in respect of domestically produced equipment was already less than 1%. If, before the October Revolution of 1917, Russian industrial exports accounted for 30% and agriculture - 70%, while in 1938 the share of industrial exports accounted for 63.6%, the share of agriculture - 36.4% of all Soviet exports. However, exports were excluded from the food needed to raise the level of domestic consumption, "36.

 

A comparison of statistical data on the structure of foreign trade, quoted in the article Alkhimova with data pre-revolutionary statistics does not, in our view, clearly the grounds for optimistic conclusions. The conclusion that the socialist industrialization did not lead to the elimination - or even mitigate - the structural barriers in foreign trade, it seems obvious: raw materials and semi-finished products in 1938, is still exchanged for finished products. The share of machinery and equipment in Soviet exports (5%), even lower than that of "factory products" in the export of pre-revolutionary Russia (5.8%) 37.

 

Deserves a separate comment referred to in Article decline in exports of food products, "necessary to increase the level of domestic consumption." It is, in all probability, on the export of grain, which is valid from 1934 as a result of sharply declining fold reduction in world prices due to the global crisis and to correct admitted in previous years "excesses." As you know, 1931 was a lean, but the export of grain continued: if in productivity in 1930 were exported 4.8 million tons, in 1931 - 5.2, in 1932 - 1.82, and in 1933 - 1760000 T38. At the same time of 1932 - 1933. of famine in the country were killed, according to various estimates, from 4,000,000 to 7,000,000 people. We also emphasize that the Soviet grain exports has been replaced mainly exports of other commodities, mainly forest and mineral resources, in comparison with which the grain is considered to be the product of a higher "level of processing" is not relevant to the category of non-renewable resources.

 

As is well known, as a result of the policy of industrialization at the cost of enormous effort and huge losses the country has created a powerful and in many ways a modern industry. The state monopoly on foreign trade and foreign exchange has played in this extremely important role. However, the Soviet industry is not formed under the influence of domestic demand free producers and households. She felt no immediate pressure and external competition. The policy of self-isolation and closeness with the active use of funds of non-market impacts, including the most powerful protectionist regime, led to the formation, strengthening and widening of the large non-market sector, focused primarily on the military.

 

External policys

In the years of the so-called "stagnation" state monopoly of foreign trade not only remained a reliable remedy the Soviet economy from the external environment, but also has a very effective tool for economic consolidation of the political regime. Thanks purchases abroad could significantly mitigate constantly deficits generated by the planned economy, both in the consumer and investment spheres. This was facilitated by the favorable situation - a positive trend in world commodity prices Soviet exports from the early 1970s until the mid-1980s.

 

General Secretary of the CPSU Central Committee Leonid Brezhnev, who stressed in a speech that "the bread for the people and the security of the country" has always been and will be the subject of his main zabot39, gave a brief and comprehensive definition of the priorities of the economic policy of the period. The tasks will undoubtedly resolved, not least because of the centralized procurement abroad, albeit with varying efficiency. By the very logic of the socialist planned system designed to comply with the ideological postulates, the second of these priorities - "national security" - was always much more "priority." In addition, the task of diversifying the supply of goods and services in the consumer sphere in general is not standing, and excessive diversity in the sector in countries with a free economy was qualified by Soviet propaganda as the cost of market competition, and was considered an expression of non-productive expenditure of social labor. Accordingly, the population of the socialist state is in a tough part of the compulsory diet: it while not starving, as in the time of Stalin's collectivization and industrialization, however, constantly in need of a variety of goods and services, which could only "get it", because it was impossible to buy.

 

As is known, the import played a special role in ensuring the supply of "bread for the people", starting from 1963, the Soviet Union became a chronic importer of grain. The problem of so-called food security, that is, to achieve self-sufficiency in basic foodstuffs, eventually only worsen. Grain imports, as well as meat, are high on the food balance, although the foreign exchange reserves were primarily used for the procurement of mechanical and electrical products.

 

Machinery and equipment have always been the main item of Soviet imports. In the Soviet Union during the entire period of its existence pursued an active industrial policy. Planned management of the economy, foreign trade and foreign exchange monopoly, it would seem, allowed the socialist state to almost any large-scale economic maneuver and achieve at least parity with the West in the technical-technological sphere. However, structural barriers in international trade is not affected, although such a task is posed. At a cost of imports of machinery and equipment is always a multiple exceeded exports, and the technological gap in the civilian sector was growing with each passing year.

 

Technological breakthroughs in selected sectors, with the defense industry, could affect the overall trend: achievements by the closure of the sphere is not used outside of it, in contrast to, for example, practiced in the U.S. transmission solutions and ideas of the military-industrial complex in the civilian sector. Accordingly, the technical and technological level produced in the USSR engineering products could not affect the specificity of the economic system as a whole. The Soviet economy is undoubtedly received from outside impetus for development, but the competition between the two systems could not replace commercial competition. Moreover, it often has assigned dubious benchmarks even in technology otnoshenii40. But the most important thing - competition systems are often forced to seek solutions at all costs: the so-called considerations of national economic efficiency or not taken in raschet41 or because distorted price structure disoriented decision makers. In the 1970-1980-ies in the country in warehouses regularly from year to year "settle" imported equipment worth 5.4 billion rubles of foreign exchange., Which, however, virtually no effect on the economic situation of enterprises that have ordered this technique. Cost is not the right equipment purchased abroad, in some years, reaching hundreds of millions of foreign currency rubles.

 

Technocratic bias generated and constantly reproduced, including the closure of the international competition, has become a common feature of the socialist planned economy. As noted by the founder of the theory of economic orders W. Eucken, in terms of administrative and economic systems engineer to play a central role, whereas in a market economy is the central figure kommersant42. Technocrats dominated even in a field that requires a special business training, as foreign trade.

The technocratic approach, combined with the ideological postulates predetermined Soviet understanding of economic security. Last interpreted as the maximum possible independence from external sources razvitiya43. Extremely diversified structure of the Soviet economy, leadership in terms of gross production of certain products finally reach the military-industrial complex - seemingly closed and sealed from external influence sphere of production - created an illusory idea that the objective - to provide economic security - is achievable, if not already not achieved.

 

In their quest for economic self-sufficiency Soviet leadership tried to eliminate primarily dependent on foreign ideological enemy, constantly referring to the threat of economic blockade. At the same time in the economic relations with developing and especially the "fraternal" socialist countries prejudices 'addiction' is almost absent in this area was dominated by different criteria and approaches.

 

With the formation of the world socialist system of the Soviet defensive lines protectionism moved away from the borders of the USSR. Soviet planning system "cracked open" in relation to the national economy of most of the other socialist countries. Moreover, the degree of openness was determined based on the level of political relations. Thus, until 1960 the main trading partner of the Soviet Union was China, and after a sharp deterioration of political relations with China in 1961 and up to the liquidation in the early 1990's, the Council for Mutual Economic Assistance (CMEA), first in terms of exports and imports in the Soviet Union kept the German Democratic Republic, with a population of about 1, 5% of China's population.

 

With countries that established relations with the political atmosphere of trust, allowed quite a profound economic interpenetration, which eventually institutionalized in the form of a "socialist economic integration" (SEI). Stumbled on an important, in our view, its peculiarities. It is a question of the primacy of political considerations in the construction of the integration of the system and its institutions serving. This suggests the EIS as an exceptional case, although a number of formal signs it can be considered as one of the main possible models of economic integration and interaction.

 

Political interest of the Soviet leadership was the fact that as much as possible economically tied to the Soviet Union satellite countries, most of whom were members of the military pact - the Warsaw Pact. Soviet Union CMEA was necessary in the first place for the approval of the political and military domination of the buffer areas. The interest of the "small" countries of the CMEA, obviously, was that, on the basis of special economic relationship with the "dominant partner" to keep under control the internal socio-political situation and to at least partially compensate for the weakness of the system, in fact, imposed on their country model of social development .

 

The one-sidedness of benefits, which provide binding satellite states to the "dominant partner", based on the billing system, more precisely planned offsets, based on the transferable ruble and on special method of pricing in the CMEA. And if the relationship with the less developed countries of the CMEA whose exports are dominated by raw materials and semi-finished products (Cuba, Mongolia), the preferences granted by the Soviet Union had been open and the amount of aid can be assessed more or less accurately, in the relations with European partners SEI-sidedness benefits was not so obvious.

 

In the last 25 years of the CMEA for the pricing for the relevant product used information on the dynamics of prices for the same product on the world market over the past five years. The calculated arithmetic average index of "world price" for the five-year period became the basis of the prices of goods interchange. This technique was thought to have provided the "clarification" of prices to market fluctuations, allowed gradually to adapt to changes in world trends - to falls or jumps "world price".

 

Set the time series over a five year period, it was only possible by the so-called "exchange goods" - raw materials, energy resources, food. But this can not be done on most "industrial" products because of the multiplicity of their parameters and characteristics. To determine the level of prices in the EIS, as a rule, used international trade contract prices for the same products. For example, to determine the price of the Czechoslovak machine materials brought about the prices of "similar" UK manufacturing machine, but not on the price of the Czechoslovak machine sold on the open market. With this practice, the European CMEA countries that supplied the Soviet Union manufactured goods in exchange for raw materials and energy, enjoy the opportunities offered by a closed system of trade and pricing, and inflated prices for their finished products. And if the subsidies, for example, Cuba, the Soviet Union through the purchase of sugar at inflated - three times in recent years - prices was evident, support for more advanced GDR, Czechoslovakia, and Hungary remained camouflaged.

 

Reliable information about the level of subsidies to European countries CMEA missing, but the general idea it was possible to make only got access to statistical compilations of foreign trade of the CMEA countries, who had marked "Secret". A comparison of calculated on the basis of data from the source of selling prices, say, knitwear production of the GDR to the East and to the West allowed to identify overpricing for export to the Soviet Union in two or three times. Complete the picture of "fair trade" within the CMEA complete disregard for the Soviet side of indirect factors, in particular transport, costs. "Fraternal countries" were invited to participate in integration projects in the Soviet Union without economic feasibility, but on the basis of political expediency, and bearing in mind the so-called inter-industry specialization of a country. Such participation is ensured in the future delivery of scarce raw materials and semi-finished products to the country and reduce dependence on imports from capitalist countries.

 

Imports of raw materials from the USSR under such a system of pricing and settlement was so profitable that some European socialist countries requested and, using the favor of the Soviet leadership gave the fuel and raw materials of new products much more than was required for the domestic export-oriented and usually extremely material-production. "Surplus" is often quite shallow after processing resold for a "hard" currency. Thus, the GDR for domestic consumption, including for the needs of advanced, export-oriented chemical industry, required each year about 11 million tons of oil. However, the Soviet Union it is 1970 - 1980-ies received 17.1 million tons of crude oil by five-year trade agreement and an additional re-buy more than 2 million tons, paying the supply of so-called foreign goods, especially food. Petroleum products from the GDR, of course, were sold to the West for hard currency. It came to the direct re-exports of Soviet raw materials. Characteristically, the issues of "obtaining" hard currency "non-traditional" methods directly involved in the GDR secret service.

 

And yet, despite this seemingly solid "anchor", the integration within the CMEA collapsed, it can be said at once, unable to withstand the opening of national economies as well as the actual system of relations within the bloc. After the transition to payments in freely convertible currency and the world, that is, contractual, and not planning price CMEA lasted only a few months. Its rate of decay, undoubtedly influenced and snowballing cancel the monopoly of foreign trade in the Soviet Union and in the European countries of the CMEA. Socialist economic integration in the end destroyed the transformation of the social order and the successor to the freedom of central planning of economic relations.

 

The Soviet period of protectionism: the results

 

In defense of the socialist system, it gains Institute was the most powerful of all the possible protectionist systems commonly used in international practice as a measure of mobilization for short periods and in extreme situations. But were thus "provided national interests in foreign economic sphere"? If judged on such criteria as the competitiveness of manufacturing industries of the national economy, we can not positively evaluate the results of the monopoly of foreign trade in the Soviet Union. For the creation of the domestic industry "hothouse" conditions due to its protection from international competition gave the result to be counterproductive. In isolation the Soviet national economy always belatedly received guidance for the ongoing development, market signals reach the industries and enterprises and indirectly, as a rule, is distorted.

 

With the monopoly of foreign trade has not managed to solve this important problem of industrial policy as overcoming the notorious structural barrier to trade and an increase in the export share of highly processed foods. The share of raw materials and certain products of its primary processing of Soviet exports to the developed capitalist countries in 1970 - 1980-s, as in previous periods, consistently above 90%.

 

Abolition of this monopoly has created a lot of problems. However, their appearance was inevitable because the planned economy is not always ready for the opening. Even if timely carefully studied the effects of abolition of the monopoly of foreign trade, the only experience that in the early 1990s, it was possible to rely on, has been linked to the gradual opening of the Chinese economy. (The experience of the NEP in terms of opening up the economy, as noted above, is not convincing.)