Documents / FOIA release
This Joint Committee Print, dated December 8, 1982, gathers studies that the Central Intelligence Agency's Directorate of Intelligence prepared for the Joint Economic Committee of the US Congress. It gives estimates of Soviet gross national product for 1950 to 1980, with indexes of industrial production, agricultural production and consumption, and explains the methods and data behind them. The foreword says official Soviet statistics inflate growth and that the CIA measures offer a more accurate picture. The document contains no UFO material.
“Gross”60+ pages
Approved for Release: 2019/07/19 C05210421 Differential Prices and New-Product Pricing Not only do relative prices of Soviet goods and services not correspond to relative costs of resources used in their production, but the price of a product often varies according to purchaser. The price dis- crimination is sometimes accomplished by selective application of taxes and subsidies, and sometimes by charging different prices. The full extent of this price discrimination is not known, but it is especially preva- lent in the fuel sector. The indirect consequence is a divergence in the relative prices of output from the value of resources used. Once a product is in serial production in the USSR, its price rarely changes. This is due partly to bureau- cratic inertia and partly to the convenience of price stability for planning and administration. To increase profits, many enterprises and ministries introduce new products that are new in name only. Creating a new product permits establishment of a new, higher price for essentially the same good and results in relative prices that do not reflect relative resource use and hence do not measure accurately the production po- tential of alternative economic activities. As with differential prices, we have insufficient information to account for this price distortion. Whenever possible, therefore, we use physical output data to measure changes in the level of output rather than deflated value data. While avoiding the new-product price problem, this method tends to understate quality change.“ The Adjusted Factor-Cost Standard Because of the deficiencies of Soviet prices, Bergson concluded that established prices did not conform sufficiently well with the requirements of the theory of optimal resource allocation to permit their use in measuring the change in Soviet production potential over time or to study the resource allocation pattern adopted by the Soviet Union. As an alternative, he proposed his adjusted factor-cost standard. For GNP to measure production potential, some strong assumptions are required: chiefly perfect com- petition, the absence of price distortions in factor “ This issue is discussed in more detail in Comparing Planned and Actual Growth Qf Industrial Ouput in Centrally Planned Econo- mies, Central Intelligence Agency, National Foreign Assessment Center, Washington, D. C., 1980. 37 93-892 O — 8? -14 markets, and the full use of all productive factors. lf these conditions are met, then the economy will operate on its production-possibility frontier, where the production of any product cannot be increased unless the production of some other product is de- creased and where the relative prices of the two products indicates the trade-off. Bergson hypothesized that the Soviet economy does not operate on its production-possibility frontier, but rather on a feasibility locus which is well short of the frontier. This shortfall of production may result from bureaucratic inefficiency or from the misallocation of resources. Bergson further conjectured that the feasi- bility locus is broadly parallel to the production- possibility frontier. Working from this hypothesis, Bergson derived a set of price rules that would be sufficient to measure the growth of production potential as represented by the feasibility locus. These rules form his AFCS. Accord- ing to Bergson, if the feasibility locus were to ap- proach the production-possibility frontier, then the AFCS would also approach the efficiency standard for valuing national income. Broadly speaking, the AFCS ensures that prices are equal to average cost and that factor prices are equal between markets and proportional to factor productivities. In particular, the AFCS requires that the following statements be true: ~ All product prices must resolve into charges for primary inputs; that is, for land, labor, and capital. ~ The differences in wages among sectors represent differences in labor productivity and workers’ disutility. - Rent is charged for the use of superior land and other natural resources. - The charge for capital consists of a depreciation allowance and an interest payment based on a rate of interest corresponding to the average level of capital productivity." ~ Commodity prices are uniform within a given mar- lket area. " There is a difference of opinion over whether capital stock should be valued gross or net of depreciation. The capital stock data used in this study are gross of depreciation. Approved for Release: 2019/07/19 C05210421
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FOIA release, from the cia-readingroom collection. The PDF is mirrored here; the original link is under it. 399 pages are in the text index: search them above, or from the library's search.