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Seventy years ago, Nikita Khrushchev became the leader of the then-superpower Soviet Union (USSR). His legacy as leader echoed through the remaining years of the USSR. His reforms did not quite achieve the successes he sought. But in this retrospective on Khrushchev’s legacy, economist Emilio Carnevali shows that Khrushchev did help some of the most neglected Soviet people and he influenced his successor, Mikhail Gorbachev, whose own reform program drew from Khrushchev’s example. Khrushchev’s legacy is subtle but profound.

From the LSE Economic History Blog.

In the immediate aftermath of Stalin’s death in March 1953, a triumvirate of Lavréntiy Beria, Georgy Malenkov, and Nikita Khrushchev led the country. The triumvirate did not last. By the end of June Beria was arrested and months later was executed, as an “enemy of the people”. In September Khrushchev was elected General Secretary of the Communist Party of the Soviet Union (CPSU). He consolidated his power by having Malenkov removed as prime minister and then led the USSR undisputedly for almost ten years.

In world affairs, Khrushchev is remembered for denouncing Stalin’s crimes at the 20th Congress of the Communist Party of the CPSU, repressing the Hungarian uprising in 1956, and confronting the US in the tense Cuban Missile Crisis of 1962.

Domestically, he tried to implement a radical economic reform that raised the hopes of many in his country and exposed the structural limitations of the Soviet system and his personal limitations as its leader.

In 1957, Khrushchev pronounced the USSR would reach the United States’ per capita meat production by 1960. His economists warned him that this was an unrealistic goal, and he admitted they were right, though only “arithmetically.” According to Khruschev, they did not take into account “what the working class can perform;” if it was not 1960, it would be 1961. In 1991, the year of the end of the USSR, the country was still a long way from reaching the same level of meat, and general food, production as the US.

Now, however, the years between 1950 and 1964, are considered the golden period of the Soviet economy, with an average annual growth of the gross national product close to 7% (during the same period, the US grew at an average annual rate of just over 3%).

Agriculture and the Virgin Lands Campaign

Khrushchev devoted most of his attention to the agricultural sector. The Virgin Lands Campaign, launched in 1954, aimed to increase production by extending the area of cultivated land eastwards, mainly into Siberia and Kazakhstan. By 1960 the USSR reached its target of cultivating 42 million more hectares.

Much of the Virgin Lands was entrusted to state-owned companies (sovkhozy) for management. Khrushchev’s preferred this institutional formation for the agricultural sector, so much so that in the years of his leadership many agricultural co-operatives (kolkhozy) were transformed into sovkhozy. Those that remained in the form of kolkhozy underwent an intense consolidation programme. Between 1940 and 1969 their number decreased from 236,000 to 34,000, while the average size of the land cultivated by each rose from 500 to 2,800 hectares.

Khrushchev also increased the prices paid to producers for the share of “compulsory” (i.e. determined by the plan) deliveries to the state. This marked a clear break with the price system inherited from the Stalin era and improved living conditions for the peasantry, narrowing the gap between the countryside and the city, between agriculture and industry.

Decentralised planning

Khrushchev’s several years as Party leader in Ukraine made him sceptical of the decision-making of a centralised bureaucracy operating from Moscow. In 1957 a reform abolished ministries linked to individual industries and shifted planning to regionally based planning centres (sovnarchozy).

The industry ministries tended to operate as large, vertically integrated, independent entities. In consequence, companies attached to a certain ministry struggled to have suppliers outside the boundaries of that same ministry. The new system was built on the premise that the regional centres could better coordinate industries.

Decentralisation did not lead to better coordination, and not only because of the impulsiveness and superficiality with which Khrushchev had attempted to impose such a radical change so quickly. The same problems between the industrial ministries affected the relations between the sovnarchozy. In 1965 Brezhnev repealed the reform and economic planning was re-centralised.

Still, Soviet citizens’ living standards were improved by the shift of resources from the production of capital goods to the production of consumer goods. Here Khrushchev moved in continuity with an economic policy strategy that had already been inaugurated in the early 1950s.

A legacy in debate

In 1962, the Soviet broadsheet Pravda published the article “The Plan, Profits, and Bonuses” by economist Esvei Liberman. The article initiated a relatively open and lively debate, in which for the first time in the USSR some of the major problems of the Soviet economy were addressed in the light of day.

Khrushchev was removed from the leadership in 1964, before the ideas he had helped circulate found partial implementation in the so-called Kosygin Reform of 1965 (later effectively dismantled during the 1970s). Yet it was that debate that was one of his most enduring legacies, as it profoundly influenced a then-young party member, Mikhail Gorbachev. Many of the ideas of the Khrushchev era would form the basis of Gorbachev’s economic programme Perestroika twenty years later.

Khrushchev was born to a very poor family in  Kalinovka, a remote village of the tsarist empire on the border between present-day Russia and Ukraine. He had started working as a child, after attending only a couple of years of school. At the end of his life, he reflected on the disproportionate nature of the challenge he faced: “I had no education and not enough culture. To govern a country like Russia, you have to have the equivalent of two academies of sciences in your head.” Yet the scholarly Gorbachev’s political struggle shows that the challenge of reforming Soviet socialism would have proved prohibitive even for a leader of far greater political and intellectual depth.