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Tea Leaves and Productivity: Bergsonian Norms for Gauging the Soviet Future

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Abstract

Abram Bergson's attitudes toward the reliability of Soviet statistics and the feasibility of socialism took shape in two distinct phases. He convinced himself and the profession by 1953 that Soviet data were ‘usable’ and that socialism could conceivably outperform capitalism. However, he reversed field a decade later on the issue of merit concluding that while the USSR would survive, negative factor productivity growth made it inherently inferior. Both predictions proved problematic. Negative factor productivity growth was never confirmed by Goskomstat's figures. The numbers had to be adjusted for ‘hidden inflaion’ to get this result, but these ‘corrections’ compromised the claim that Soviet statistics were ‘reliable’. Likewise, the Soviet Union's demise casts a cloud over the ‘usability’ both of official and adjusted statistics. There is nothing in these series that explains Mikhail Gorbachev's and Boris Yeltsin's haste in scuttling Command Communism.

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Notes

  1. This figure was found in the State Archive of the Soviet Union. Robert Davies however recently has obtained NKVD census data on prisoners in 1939 that are twice the corresponding GARF, number, see (Davies, 2003).

  2. Personal conversation with Bergson about his Moscow experience.

  3. Bergson, 1948, reprinted in (Bergson, 1966a), Essays in Normative Economics, p. 234. Bergson did not speak explicitly about optimal programming in 1948, but this is how the issue of equivalence between perfect planning and perfect competition was treated by Kontorovich a decade earlier (Kontorovich, 1965). Duality proofs in pure mathematics and microeconomics like constrained household utility maximisation had been around earlier, see (Hotelling, 1932, 1935).

  4. Bergson completed The Structure of Soviet Wages begun at Harvard in 1937 by the end of 1942 (Bergson, 1950). He asserts that his estimates are ‘seemingly the first for the USSR on any scale,’ p. 208.

  5. Note at this early stage Bergson had not independently re-computed Soviet GNP growth, and really was not in a position to hold a strong opinion about the USSR's economic performance. Peter Wiles characterised Bergson's assessment of Soviet planning before 1964 as unduly ‘rationalistic,’ far removed from the crudities of administrative command planning (Wiles, 1965).

  6. Later Bergson would add, ‘The measurement of national income, it has been said, is an art rather than a science. If this is so (and few practitioners would disagree), for Russian national income it may be felt the art must even assume an ocult character. Is it really worthwhile to attempt such measurements in this case?… Great as the difficulties are, they do not appear to be overwhelming. With sufficient care and industry, it should be possible to limit the range of conjecture, and even uncertain knowledge may be highly valuable on a vital theme.’ Abram Bergson, The Real National Income of the Soviet Union Since 1928, 1961. Quoted in CIA, Measures of Soviet Gross National Product in 1982 Prices, Joint Economic Committee of Congress, Washington, DC, November 1990, p. 1.

  7. Bergson's reliability argument was persuasive as far as it went, but it was also illogical because (Bergson, 1950) already noted the distortionary impact of new goods pricing which later caused his Laspeyres measure of Soviet growth 1928–1937 of 11.9 per cent per annum to be 4.8 percentage points less than the official Soviet claim of 16.7 per cent (Bergson, 1963a). This would not have mattered if the gap were explained by NMP accounting, or adjusted factor costing, but it was attributable instead to the difference between the sub-aggregate data he used to recalculate Soviet GNP and the official Soviet national income aggregate. He subsequently argued that the primary cause of the disparity was new goods pricing (Bergson, 1972). Cf. (Bergson, 1950) and (Harrison, 2000 and 1998). However, Stanley Cohn's re-computations using sector of origin instead of expenditure data indicated that there was more to the discrepancy than new product pricing (Cohn, 1972). The ‘hidden inflation’ issue which began dogging the profession in the 1970s was unaddressed. Also see (Markevich and Gregory, 2003) (Gregory, 2003a, 2003b). Their description of the arbitrariness of Soviet planning doesn’t inspire confidence in the systems directors ‘need’ for accurate information.

  8. It is doubtful that a consumption economy can be established in Russia. A decentralised economic system geared to a steady rise in levels of consumption would leave the Soviet dictatorship without a social function, without a justification for its existence. It is much more likely that the dictatorship will continue the policy of willfully provoking one international crisis after the other and of maintaining a high rate of investment as the economic pendant to such a policy. Then a renewed curtailment of such managerial freedoms as have been granted since Stalin's death, followed by a general reversal of the decentralisation policy, should be only a matter of time, and enterprise and management in Russia should once more return to the normalcy of Soviet mercantilism, concealed beneath a generous veneer of socialist phraseology’ (Gerschenkron, 1960, pp. 294–295).

  9. These troublesome issues were discussed, but never placed front and center. On structural militarisation, see (Rosefielde, 2005a; Samuelson, 2000; Sokolov, 2003).

  10. Both official and western series showed growth deceleration, but official rates were still well above those in the west. Gur Ofer observed at the Bergson Memorial Conference, Harvard, November 24, 2003, that Bergson was optimistic about Russia's prospect in his classroom presentation in 1964. Apparently, he was still wrestling with the question despite his gloomy written verdict.

  11. Bergson (1966b), pp. 237–238. At this point he references Bergson (1964).

  12. Bergson (1966b), p. 238.

  13. Research undertaken by Rosefielde on the Hecksher-Ohlin efficiency of Soviet trade (Rosefielde, 1973), Ofer on the service sector (Ofer, 1973), Gregory on modernisation patterns (Gregory, 1970) and Spechler on the quality of Soviet products fell into this middle ground (Spechler, 1981). They confirmed Bergson's earlier work that the system was viable, but not that it could be as productive as western market systems.

  14. It is widely accepted that Soviet productivity growth declined after Bergson's call in 1963. Combined factor productivity turned negative on the CIA's calculations; that is, combined input growth exceeded output growth indicating that technological progress wasn’t sufficient to offset diminished factor return (Noren and Kurtzweg, 1993, pp. 14 and 17). Combined input factor productivity using official Soviet data however does not confirm this negative trend (see Table 4, this paper).

  15. It should be noted however that while Bergson resisted the idea that the Soviet capital series he constructed were biased by hidden inflation, and hence that the low combined factor productivity he computed was illusory, he nonetheless tacitly accepted the CIA's hidden inflation adjustment to its civilian and military series by refraining from public criticism. See (Rosefielde, 2005a, chapter 3).

  16. Although Bergson acknowledged the dubiousness of his planners’ preferences concept (Bergson, 1966b), he continued to defend the idea that adjusted ruble factor cost prices measured opportunity costs (marginal rate of enterprise product transformation) on average, given planners’ preferences (Bergson, 1950, 1961, 1995). His tenacity on this point stems from the perception that the comparative merit of his estimates of Soviet national income turned on adjusted factor costing. …I in fact made it a major concern to explore the problem posed by the divergences of Soviet ruble prices from ‘scarcity values’ and that because of such divergences I was led to reject the usual expedient in national income measurement, which is simply to value goods and services produced in terms of prices actually prevailing in the country in question. Instead I applied an ‘adjusted ruble’ standard of valuation, attempting to correct ruble prices for major distortions. In the calculation of a complex aggregate, such as national income, valuation in terms of some standard is, of course, unavoidable (Bergson, 1966c). This assessment is wrong in two respects. First, the elimination of retail turnover taxes is standard SNA practice. Second, substituting capital charges for official profit doesn’t transform Soviet fiat prices into measures of enterprise marginal rates of transformation.

  17. Bergson, like Francois Joseph du Tremblay, confidant to Cardinal Richelieu was a ‘gray eminence’ in the area of Soviet defense spending and real military production. Based on his own earlier work, he accepted the official Soviet defense budgetary statistic as accurate before the 1975 ‘bombshell’ intelligence discovery that this wasn’t so for 1969 and 1970 (see Firth and Noren, 1998), and sided with the CIA on William Lee's estimates, without categorically rejecting them (Lee, 1977).

  18. The latter was never verified using official series, see (Rosefielde, 1998, 2005a; Lee, 1990).

  19. Yasushi Toda correctly pointed out that other production functions, and other estimating procedures could yield different results. Bergson understood this and had a strong preference for his own method.

  20. Cf. (Allen, 2003, Table 9).

  21. Official Soviet statistics 1926–1928 reported NMP and industrial growth in excess of 30 per cent per annum. It isn’t clear why these and similarly preposterous statistics from the 1920s were not treated as prima facia proof of their unreliability, see (Rosefielde, 2005b).

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  1. Gardner Hall, CB#3305, University of North Carolina, Chapel Hill, 27599-3305, NC, USA

    Steven Rosefielde

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Rosefielde, S. Tea Leaves and Productivity: Bergsonian Norms for Gauging the Soviet Future. Comp Econ Stud 47, 259–273 (2005). https://doi.org/10.1057/palgrave.ces.8100108

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