Reform of Economic Administration

Supreme Soviet of the USSR, Law on Further Improving the Organization of Management of Industry and Construction. May 10, 1957

This decree announced Khrushchev’s boldest administrative reform of the 1950s: replacing centralized industrial ministries with a network of regional economic councils (sovnarkhozy). Framed as a practical response to slowing growth and bureaucratic inertia, it promised faster decision-making, closer coordination of enterprises within each region, and greater responsibility for local managers. At the same time, it shifted power away from Moscow ministries toward republican and regional party organs, tightening party oversight even as it “decentralized” administration. The document captures Khrushchev’s belief that reorganization could unlock efficiency without changing the planned economy’s fundamentals.

Original Source: V. N. Malin, et al., Spravochnik partiinogo rabotnika (Moscow, 1957), p. 227.

The USSR Supreme Soviet notes that the question of further improving the organization of the management of industry and construction submitted by the Party Central Committee and the USSR Council of Ministers for examination by the seventh session of the USSR Supreme Soviet is of great significance in the successful solution of tasks of communist construction.

The nationwide discussion of this question which preceded the USSR Supreme Soviet session and its examination at the session itself have shown that the measures worked out by the Party Central Committee and the USSR Council of Ministers have met with the unanimous support and approval of all peoples of the Soviet Union. These measures fully accord with the tasks of developing the national economy of the USSR at its present stage and with the interests of a further strengthening of the country's economic might and a steady rise in the Soviet people's well-being.

As a result of consistent implementation of the Leninist general line regarding the preponderant development of heavy industry as the very foundation of the entire Soviet economy, the peoples of the Soviet Union, under the leadership of the Communist Party, have during the years of Soviet rule once and for all put an end to the age-old economic and cultural backwardness of our country. They have created a powerful socialist industry and large-scale mechanized agriculture, and have achieved the flourishing of science and technology and a tremendous economic and cultural advance of all nations and peoples of the USSR. The Soviet Union has surpassed many capitalist countries in economic development and, in terms of the level of industrial output, has taken second place in the world. By 1957 the volume of industrial output was 30 times that of the pre-Revolutionary period and the volume of machine-building and metal-processing output was 80 times as great. The generation of power has increased nearly 100 times. Thanks to the rapid development of heavy industry, many sectors of the national economy have been equipped with up-to-date machinery; this alleviates, to a tremendous extent, the labor of millions of Soviet people and raises their productivity. During the past years major successes have been achieved in the development of socialist agriculture. Sown areas have been considerably expanded by developing virgin and idle lands. The harvest yield of grain and other agricultural crops has risen sharply. Output of livestock products has increased. On the basis of the successes achieved in the development of the national economy, the working people's standard of living is steadily rising in our country.

The outstanding successes in the development of our country's socialist economy are the most convincing confirmation of the correctness of the policy pursued by the Communist Party and the Soviet government, a proof of the great vital force of the Leninist principles of socialist economic management of the entire national economy on the basis of a unified state plan and centralized guidance of economic construction with maximum development of the creative initiative of the masses and their extensive participation in production management.

At the same time, the tremendous growth of the national economy, the creation of a powerful socialist industry, the unprecedented scale of industrial construction in union and autonomous republics, territories and many provinces, and the existence locally of numerous cadres of highly qualified specialists and scientists pose ever more insistently the question of the necessity of further improving the organizational forms of the management of industry and construction in order to bring management closer to production-to enterprises and construction projects-and to make it more concrete and efficient.

At present, with more than 200,000 industrial enterprises and 100,000 construction projects in our country, it is impossible to manage production concretely and efficiently from several all-Union industrial ministries and agencies. It has become imperative to expand even more the powers of union republics in the sphere of economic construction and to transfer the center of gravity of operational guidance of enterprises and construction projects to the localities, to economic administrative regions.

The interests of developing the USSR economy demand further improvement in the organizational forms of the management of industry and construction, the setting up of more flexible methods of economic management that will give even wider scope to the development of the country's production forces.

Towards this end it is necessary to make the transition from the management of industry and construction through industrial ministries and agencies, which have played a positive role in economic construction, to new forms of the management of industrial enterprises and construction projects on the territorial principle, preserving their specialization by industry on the basis of economic regions. The transition to new forms of management of industry and construction will make it possible to improve the guidance of economic construction by eliminating numerous departmental barriers which impede further development of specialization and co-operation in industry and to make the fullest use of existing reserves. Economic councils, organized in economic administrative regions, should be the main organizational form of the management of industry and construction.

Realization of these measures marks a new stage in implementation of the Leninist principle of democratic centralism in the guidance of economic construction and in further strengthening the planning principle on a nationwide scale, and makes it possible correctly to combine centralized state guidance of the economy with development of the initiative of republic and local agencies, with an expansion of their rights and responsibility and with even more active participation of the broad working masses in production management. This will ensure a steady rise in material output, successful realization of technical progress, the fullest utilization of reserves in the national economy, a rise in the productivity of social labor, a strengthening of the country's economic might and an advance in the Soviet people's well-being.

The USSR Supreme Soviet resolves:

ARTICLE 1. To approve the measures for improving the organization of the management of industry and construction which have been worked out by the Party Central Committee and the USSR Council of Ministers, which received unanimous support during the nationwide discussion and which aim at ensuring a steady advance of the country's national economy, further extension of the powers of the union republics in economic construction, the bringing of management closer to production, still broader participation of the masses of working people in production management and comprehensive development of their creative initiative in communist construction.

ARTICLE 2. To establish that the management of industry and construction is to be carried out according to the territorial principle on the basis of economic administrative regions.

The economic administrative regions are to be formed by the Supreme Soviets of the union republics.

ARTICLE 3. An economic council for the management of industry and construction is to be formed in each economic administrative region.

ARTICLE 4. The economic council of an economic administrative region is to be formed by the union republic Council of Ministers and will consist of a chairman, vice-chairman and members of the economic council.

To establish that the chairmen of economic councils, on the recommendation of the chairman of the union-republic Council of Ministers to the union republic Supreme Soviet, may be appointed Ministers and be included in the union-republic Council of Ministers.

ARTICLE 5. The economic council of an economic administrative region is to be directly subordinate in all its activities to the union-republic Council of Ministers.

The USSR Council of Ministers is to exercise direction of the economic councils through the union republic Councils of Ministers.

ARTICLE 6. The economic council of an economic administrative region is to have a technical-economics council with the status of a consultative body.

ARTICLE 7. The structure of the economic council of an economic administrative region is to be confirmed by the union-republic Council of Ministers.

ARTICLE 8. The economic council of an economic administrative region, within the bounds of its competence, makes decisions and issues directives on the basis and in execution of the laws of the USSR and union republics and of the decrees and directives of the USSR Council of Ministers and the union-republic Council of Ministers.

The decisions and directives of an economic council can be revoked by the union-republic Council of Ministers.

The USSR Council of Ministers has the right to suspend the decisions and directives of an economic council.

ARTICLE 9. In view of the reorganization of the management of industry and construction, to abolish the following all-union USSR ministries: Automobile Industry; Machine Building; Instruments and Automation; Machine Tools; Construction Machinery and Road Machine Building; Construction for the Oil Industry; Tractor and Farm Machine Building; Transport Machine Building; Heavy Machine Building; Electrical Equipment Industry.

ARTICLE 10. To merge the USSR Ministry of Power Plants and the USSR Ministry of Power Plant Construction into an all-union USSR Ministry of Power Plants.

To merge the USSR Ministry of the Defense Industry and the USSR Ministry of General Machine Building into an all-Union USSR Ministry of the Defense Industry.

ARTICLE 11. To abolish the following union-republic USSR ministries: Paper and Wood-Processing Industry; Urban and Rural Construction; 'Light Industry; Lumber Industry; Oil Industry; Meat and Dairy Products Industry; Food Products Industry; Building Materials Industry; Fishing Industry; Construction; Construction for the Metallurgical and Chemical Industries; Construction for the Coal Industry; Coal Industry; Nonferrous Metallurgy; Ferrous Metallurgy.

In connection with this, to deem it necessary to abolish the corresponding Union-republic ministries of the union republics.

ARTICLE 12. To transfer enterprises and organizations which are under ministries to be abolished to the direct jurisdiction of the appropriate economic councils of the economic administrative regions.

ARTICLE 13. To transfer enterprises and organizations which fall under the all-union Ministries of the Aviation Industry, the Defense Industry, the Radio Industry, the Shipbuilding Industry, the Chemical Industry, and Power Plants to the direct jurisdiction of the appropriate economic councils of the economic administrative regions, according to a list approved by the USSR Council of Ministers.

To assign to the USSR ministries mentioned in this article the functions of planning their industries and seeing to high technical standards in the development of production. To establish that these functions are to be carried out by the ministries through the economic councils of the economic administrative regions.

ARTICLE 14. To transfer enterprises which fall under the non-industrial USSR ministries to the direct jurisdiction of the appropriate economic councils, according to a list approved by the USSR Council of Ministers.

ARTICLE 15. To entrust the USSR Council of Ministers, in accordance with this law, with establishing the procedure and dates for transferring enterprises and organizations, as well as equipment, raw materials and other property, under the ministries to be abolished to the economic councils of the economic administrative regions.

ARTICLE 16. To entrust the USSR Council of Ministers and the union republic Councils of Ministers with the task of providing employment, within the shortest period of time, for employees released from the apparatus of ministries and agencies, displaying in this the necessary attention and concern.

ARTICLE 17. To entrust the union-republic Councils of Ministers with submitting for consideration by the union-republic Supreme Soviets proposals for abolishing the republic economic ministries and for transferring the enterprises and organizations under these ministries to the economic Councils of the economic administrative regions or to the local Soviets.

ARTICLE 18. To reorganize the USSR Council of Ministers' State Commission for Long-Range Planning of the National Economy as the USSR Council of Ministers' State Planning Committee (USSR Gosplan).

To establish that the USSR State Planning Committee is to be a scientific economic planning agency of the country's national economy.

To entrust the USSR State Planning Committee with the comprehensive study of the national economy's requirements and the drafting of efficient and long-range plans for development of the national economy, taking into account the achievements of science and technology, with the conduct of a single centralized policy in developing major branches of the national economy and, on this basis, with ensuring efficient distribution of the country's production forces and balanced development of all branches of the national economy, and also with working out plans for the material and technical supply of the national economy and with ensuring control over strict observance of state discipline in providing supplies for industrial production.

In this connection, to abolish the USSR Council of Ministers' State Economic Commission for Current Planning of the National Economy, inasmuch as its functions will be carried out by the USSR State Planning Committee and the Union-republic state planning commissions.

ARTICLE 19. To set up a State Scientific and Technical Committee under the USSR Council of Ministers, entrusting it with the study of the achievements of Soviet and foreign science and technology and of advanced production experience, with wide-scale propaganda of these achievements, with the publication of scientific and technical literature and with control over the development and introduction of new machinery in the national economy.

In this connection, to abolish the USSR Council of Ministers' State Committee on New Technology.

To consider it expedient to set up scientific and technical committees under the union-republic Councils of Ministers and, when necessary, under the economic councils of the economic administrative regions.

ARTICLE 20. To add to the composition of the USSR Council of Ministers the chairmen of the union republic Councils of Ministers, the chairman of the USSR Council of Ministers' State Scientific and Technical Committee and the head of the USSR Council of Ministers' Central Statistical Administration.

To establish that vice-chairmen of the USSR State Planning Committee and the heads of the major departments of the USSR State Planning Committee, on the recommendation of the chairman of the USSR Council of Ministers to the USSR Supreme Soviet, may be appointed USSR Ministers and included in the USSR Council of Ministers.

ARTICLE 21. To instruct the USSR Council of Ministers to work out and approve Statutes on the Economic Councils of Economic Administrative Regions, on the USSR Council of Ministers' State Planning Committee, on the USSR Council of Ministers' State Scientific and Technical Committee and on the USSR Council of Ministers' Central Statistical Administration. ARTICLE 22. To establish that reorganization of the management of industry an construction, provided for by this law, must be carried out by July 1957.

D. KOROTCHENKO, Chairman of the Presidium, USSR Supreme Soviet.
M. GEORGADZE, Secretary of the Presidium
The Kremlin, Moscow, 10 May 1957.

Source: Current Digest of the Soviet Press, Vol. IX, No. 20 (1960), p. 14.