Economic Collapse of Soviet Union
Unproductive Activity Page 7


Theoretical unpreparedness
Page 2

Dumas analysis
Page 3

Breakdown of technology
Page 4

Breakdown of science
Page 5

Resource diversion
Page 6

Unproductive activity
Page 7

Militarization and bureaucracy
Page 8

Why did the USSR fall first?
Page 9

Did the USSR have any choice?
Page 10

Page 11

Unproductive economic activity is built into the structure of capitalism. The capitalist class itself is an unproductive class, and it develops around itself other unproductive activities such as financial speculation, legal battles, and excessive, misleading advertising. According to Marxist economist Victor Perlo, half of all labor in the U.S. is unproductive.(15) Included in his figure are all government employees, however, as the definition of "unproductive" is made very broad.

A narrower definition of unproductive activity is required by the Dumas formulation of a Social Material Product (SMP) as an alternative to the traditional Gross National Product (GNP). For Dumas, the SMP measures "the full output of the country's production system that involves the material standard of living."(16) This includes useful services as well as production goods, and it includes unpaid labor as well as paid labor. Hence, in the Dumas formulation, productive labor includes all services that "contribute to increase either the present or future material standard of living." To give an example, many government employees who are classified automatically as unproductive by Perlo, would be classified as productive because they provide services which raise the standard of living.

The measurement of SMP as an alternative to GNP would prove useful to socialists and socialist countries, as it would give us a measure of the true health of an economy. For example, it would have made it clear that the Soviet Union's economy was failing a number of years ago when it was not providing needed goods and services to the people. The Soviet economy includes a large unproductive, non-military sector which shows up in GNP measures but would not show up in an SMP measure. I am reminded of the time I served as translator for an American group visiting an architectural institute near Kiev that produced blueprints for farm buildings. "How many people work here?" I asked. The answer was, "700." And how many such institutes are there in the Soviet Union that produce similar blueprints for farm buildings?" The answer was "several hundred." Each time I had to repeat the questions, because I did not believe the size of the numbers, but I was assured they were correct. And if Soviet farmers are anything like U.S. farmers, they wouldn't use the blueprints anyway!

A case can be made that militarization of an economy contributes substantially to the development of its unproductive bureaucratic sector as well as to its counter-productive sector. In the U.S., the "cost-plus" system of military contracts has become a leading source of capitalist profits and a model for other sectors of the economic system, Profit rates on military contracts are far higher than on civilian contracts, a fact that has often been documented.(17) But the problem runs deeper. There is enormous waste in a system that has no market competition and routinely solicits non-competitive, padded bids and routinely pays kickbacks and cost over-runs. These practices have become standard not only for defense contracts, but for other transactions of the military-industrial complex.

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