USSR: Measures of Economic Growth and Development, 1950-80

Approved for Release: 2019/07/19 C05210421
An Index of Consumption
in the USSR
Introduction
The index of consumption described in this paper was
developed to provide a measure of real consumption in
the Soviet Union in the post-war period that is
comparable in concept and methodology to measures
available for Western countries. The index defines
consumption to include all household expenditures on
goods and services for consumption plus government
current expenditures on health andeducation services.
ln Western national accounts—those of the OECD,
for example—this definition is equivalent to “private
final consumption expenditures“ plus the health and
education components of “government final consump-
tion expenditures". Although treated separately here,
the index is designed as a major component of an
index of gross national product (GNP).‘ Like most of
the other components of CIA’s reconstruction of
Soviet GNP over time, the consumption index is an
aggregate of time series, most of them in physical
units, weighted by expenditures in rubles in the base
year (1970). This approach contrasts with that in
Western countries, where the GNP index and its
components are usually deflated value measures. In
the Soviet case, the resort to physical measures was
both necessary and desirable, because of the lack of
trustworthy price indexes as well as current expendi-
ture data in most cases.
A Western-type measure of progress in raising living
standards in the USSR is required for two important
reasons. First, the measures published by the Soviet
government are conceptually unsuitable for compari-
sons with those published by Western countries and
also are widely believed to have a large upward bias.
The official Soviet measures—“real per capita in-
comes” and “personal consumption” plus “material
expenditures of institutions serving the population”-
are couched in the Marxian conceptual framework of
net material product; thus, they exclude the labor
inputs into personal and oommunal services, and they
include depreciation and some other elements not
considered to be final consumption expenditures in the
West.’ The Soviet government publishes neither a cost
'
See JEC, GNP, 1950-80.
2
For details, see United Nations, Comparisons ofthe System of
National Accounts and the System of Balances of the National
Economy, Part l, Series F, No. 20, New York (1977).
323
of living index, nor a suitable deflator for net material
product by end use. The official index of retail prices
has serious methodological and conceptual faults.‘
Second, progress in raising living standards is a major
facet of the challenge that Soviet-style socialism has
long posed to Western market-oriented systems. The
goal to “overtake and surpass" capitalist rivals was
laid down by Stalin in the early 1930s and reiterated
with great fanfare by Khrushchev in the early l960s.
Indeed, the Program of the 22nd Party Congress was
designed to bring Soviet society to communism “in
the main" by 1980, when the Soviet people would
have a “standard of living higher than that of any
capitalist country." ‘
Thus, provision of a reliable
measure of real gains in living standards is key to an
evaluation of the Soviet Union's progress toward its
goal.’ The CIA index is the only Western-type mea-
sure of consumption that has been constructed and
kept up to date for the entire period since l950. The
results of its several recent versions have been pub-
lished periodically in JEC compendia on the Soviet
economy.° The index described in this paper is a
somewhat revised version of that published in JEC,
1979. Two other Western-type indexes are available
for a part of the period—indexes for I950-58 by.
Bergson and Chapman "
and an index for 1958-64 by
Becker.” These indexes have not been revised to take
account of more recent information or extended to
later years. The CIA index thus fills a large gap in
Western research on trends in levels of living in the
Soviet Union in the post-war years. The index is kept
continuously under review, with a view to increasing
its reliability as new information permits.
’
Gertrude E. Schroeder, “An Appraisal of Soviet Wage and
Income Statistics" and Morris Bornstein, “Soviet Price Statistics"
in Treml and Hardt, pp. 307-312, 370-378.
‘
Pravda, October 19, 196]. _ _
’
The Soviet achievement is evaluated in a comparative framework
in Gertrude E. Schroeder and lmogene Edwards. Consumption in
the USSR: An International Comparison, US Congress, Joint
Economic Committee, I981.
°
JEC, I966, Part II-B, pp. 499-529; JEC, I973. PP. 376-403; JEC.
I976, pp. 620-660; JEC, I979, Vol. l, pp. 759-789.
’
Janet G. Chapman, “Consumption,” in Abram Bergson and
Simon Kuznets, eds., Economic Trends in the Soviet Union,
Cambridge, Harvard University Press, I963, pp. 235-282.
‘Abraham S. Becker, Soviet National Income, I958-I964, RAND
Berkeley, University of California Press, I969, pp. l I9. 222-227.
Approved for Release: 2019/07/19 C05210421