Speech Delivered
at a Conference of Business Executives

June 23, 1931

Comrades, the materials presented to this conference show that as regards the fulfilment of the plan our industry presents a rather motley picture. There are branches of industry that have increased their output during the past five months 40 to 50 per cent compared with last year. Other branches have increased their output not more than 20 to 30 per cent. Lastly, there are certain branches that show a very small increase, some 6 to 10 per cent and sometimes even less. Among the latter we must include coal mining and the iron and steel industry. The picture, as you see, is a motley one.

How is this diversity to be explained? Why are certain branches of industry lagging behind? Why is it that certain branches of industry show an increase of only 20 to 25 per cent, while coal mining and the iron and steel industry show an even smaller increase and are trailing behind other branches?

The reason is that lately the conditions of development of industry have radically changed; new conditions demanding new methods of management have arisen; but some of our economic executives, instead of changing their methods of work, are continuing in the old way. The point, therefore, is that the new conditions of development of industry require new methods of work; but some of our economic executives do not understand this and do not see that they must now adopt new methods of management. That is the reason why certain branches of our industry are lagging behind. What are these new conditions of development of our industry? How did they arise?

There are at least six such new conditions. Let us examine them.

## I MANPOWER

First of all, there is the question of the supply of manpower for our factories. Formerly, the workers usually came of their own accord to the factories and mills—to some extent, therefore, things proceeded automatically in this sphere. And this happened because there was unemployment, there was differentiation in the countryside, there was poverty and fear of starvation, which drove people from the country to the town. You remember the formula: “The flight of the peasant from the country to the town”? What compelled the peasant to flee from the country to the town? The fear of starvation, unemployment, the fact that the village was like a stepmother to him, and he was ready to flee from his village to the devil himself, if only he could find some sort of work.

Such, or nearly such, was the state of affairs in the recent past.

Can it be said that the same conditions prevail now? No, it cannot. On the contrary, conditions have now radically changed. And because conditions have changed we no longer have an automatic influx of manpower. What, in point of fact, has changed during this period? Firstly, we have done away with unemployment— consequently, we have abolished the force that exercised pressure upon the “labour market.” Secondly, we have radically undermined differentiation in the countryside —consequently, we have overcome the mass poverty there, which drove the peasant from the country to the town. Lastly, we have supplied the countryside with tens of thousands of tractors and agricultural machines, we have smashed the kulak, we have organised collective farms and have given the peasants the opportunity to live and work like human beings. Now the countryside cannot any longer be termed a stepmother to the peasant. And precisely because it can no longer be termed a stepmother, the peasant has begun to settle down in the countryside; we no longer have “the flight of the peasant from the country to the town,” nor an automatic influx of manpower. As you see, we now have an entirely new situation and new conditions in regard to the supply of manpower for our factories. What follows from that?

It follows, firstly, that we must no longer count on an automatic influx of manpower. This means that we must pass from the “policy” of letting things proceed automatically to the policy of organised recruiting of workers for industry. But there is only one way of achieving this—that of contracts of economic organisations with collective farms and collective farmers. As you know, certain economic organisations and collective farms have already adopted this method; and experience has shown that this practice yields important advantages both for the collective farms and for the industrial enterprises. It follows, secondly, that we must pass immediately to mechanisation of the heavier processes of labour and develop this to the utmost (timber industry, building industry, coal mining, loading and unloading, transport, iron and steel industry, etc.). This, of course, does not mean that we must abandon manual labour. On the contrary, manual labour will continue to play a very important part in production for a long time to come. But it does mean that mechanisation of labour processes is for us the new and decisive force, without which neither our tempo nor the new scale of production can be maintained. There are still quite a number of our economic executives who “do not believe” either in mechanisation or in contracts with collective farms. These are the very executives who fail to understand the new situation, who do not want to work in the new way and sigh for the “good old times” when manpower “came of its own accord” to the enterprises. Needless to say, such economic executives are as remote from the new tasks in economic construction, which are imposed by the new conditions, as the sky from the earth. Apparently they think that the difficulties in regard to manpower are accidental and that the shortage of manpower will disappear automatically, so to speak. That is a delusion, comrades. The difficulties in regard to manpower cannot disappear of themselves. They can disappear only as the result of our own efforts. Hence the task is to recruit manpower in an organised way, by means of contracts with the collective farms, and to mechanise labour.

That is how matters stand with regard to the first new condition of development of our industry.

Let us pass to the second condition.

## II WAGES

I have just spoken about the organised recruiting of workers for our factories. But recruiting workers is not all that has to be done. In order to ensure manpower for our enterprises we must see to it that the workers are stably connected with their factories and make the composition of the labour force in the factories more or less constant. It scarcely needs proof that without a constant labour force who have more or less mastered the technique of production and have become accustomed to the new machinery it will be impossible to make any headway, impossible to fulfil the production plans. Unless this is achieved, we shall have to keep on training new workers and to spend half the time on training them instead of making use of this time for production. But what is actually happening now? Can it be said that the composition of the labour force at our factories is more or less constant? Unfortunately, this cannot be said. On the contrary, we still have a so-called fluidity of manpower at our factories. More than that, in a number of factories the fluidity of manpower, far from disappearing, is increasing and becoming more marked. At any rate, you will find few factories where the personnel does not change at least to the extent of 30 to 40 per cent of the total in the course of half a year, or even in one quarter. Formerly, during the period of restoration of our industry, when its technical equipment was not very complex and the scale of production not very large, it was more or less possible to “tolerate” this so-called fluidity of manpower. Now it is another matter. Now the situation is radically different. Now, in the period of intensive reconstruction, when the scale of production has become gigantic and technical equipment has become extremely complex, the fluidity of manpower has become a scourge of production and is disorganising our factories. To “tolerate” the fluidity of manpower now would mean disintegrating our industry, destroying the possibility of fulfilling production plans and ruining any chance of improving the quality of the output. What is the cause of the fluidity of manpower? The cause is the wrong structure of wages, the wrong wage scales, the “Leftist” practice of wage equalisation. In a number of factories wage scales are drawn up in such a way as to practically wipe out the difference between skilled and unskilled labour, between heavy and light work. The consequence of wage equalisation is that the unskilled worker lacks the incentive to become a skilled worker and is thus deprived of the prospect of advancement; as a result he feels himself a “visitor” in the factory, working only temporarily so as to “earn a little money” and then go off to “try his luck” in some other place. The consequence of wage equalisation is that the skilled worker is obliged to go from factory to factory until he finds one where his skill is properly appreciated.

Hence, the “general” drift from factory to factory; hence, the fluidity of manpower.

In order to put an end to this evil we must abolish wage equalisation and discard the old wage scales. In order to put an end to this evil we must draw up wage scales that will take into account the difference between skilled and unskilled labour, between heavy and light work. We cannot tolerate a situation where a rolling-mill worker in the iron and steel industry earns no more than a sweeper. We cannot tolerate a situation where a locomotive driver earns only as much as a copying clerk. Marx and Lenin said that the difference between skilled and unskilled labour would exist even under socialism, even after classes had been abolished; that only under communism would this difference disappear and that, consequently, even under socialism “wages” must be paid according to work performed and not according to needs. But the equalitarians among our economic executives and trade-union officials do not agree with this and believe that under our Soviet system this difference has already disappeared. Who is right, Marx and Lenin or the equalitarians? It must be assumed that it is Marx and Lenin who are right. But it follows from this that whoever draws up wage scales on the “principle” of wage equalisation, without taking into account the difference between skilled and unskilled labour, breaks with Marxism, breaks with Leninism. In every branch of industry, in every factory, in every shop, there is a leading group of more or less skilled workers who first and foremost must be retained if we really want to ensure a constant labour force in the factories. These leading groups of workers are the principal link in production. By retaining them in the factory, in the shop, we can retain the whole labour force and radically prevent the fluidity of manpower. But how can we retain them in the factories? We can retain them only by promoting them to higher positions, by raising the level of their wages, by introducing a system of wages that will give the worker his due according to qualification.

And what does promoting them to higher positions and raising their wage level mean, what can it lead to as far as unskilled workers are concerned? It means, apart from everything else, opening up prospects for the unskilled worker and giving him an incentive to rise higher, to rise to the category of a skilled worker. You know yourselves that we now need hundreds of thousands and even millions of skilled workers. But in order to build up cadres of skilled workers, we must provide an incentive for the unskilled workers, provide for them a prospect of advancement, of rising to a higher position. And the more boldly we adopt this course the better, for this is the principal means of putting an end to the fluidity of manpower. To economise in this matter would be criminal, it would be going against the interests of our socialist industry.

But that is not all.

In order to retain the workers in the factories we must still further improve the supply of goods and the housing conditions of the workers. It cannot be denied that a good deal has been done during the last few years in the sphere of housing construction and supplies for the workers. But what has been done is altogether inadequate compared with the rapidly growing requirements of the workers. It will not do to plead that there were fewer houses before than there are now and that therefore we can be content with the results achieved. Nor will it do to plead that workers’ supplies were far worse before than they are now and therefore we can be satisfied with the present situation. Only those who are rotten to the core can content themselves with references to the past. We must proceed, not from the past, but from the growing requirements of the workers at the present time. We must realise that the conditions of life of the workers have radically changed in our country. The worker today is not what he was previously. The worker today, our Soviet worker, wants to have all his material and cultural needs satisfied: in respect of food, housing conditions, cultural and all sorts of other requirements. He has a right to this, and it is our duty to secure these conditions for him. True, our worker does not suffer from unemployment; he is free from the yoke of capitalism; he is no longer a slave, but the master of his job. But this is not enough. He demands that all his material and cultural requirements be met, and it is our duty to fulfil this demand of his. Do not forget that we ourselves are now making certain demands on the worker—we demand from him labour discipline, intense effort, emulation, shock-brigade work. Do not forget that the vast majority of workers have accepted these demands of the Soviet Government with great enthusiasm and are fulfilling them heroically. Do not be surprised, therefore, if, while fulfilling the demands of the Soviet

Government, the workers in their turn demand that the Soviet Government should fulfil its obligations in regard to further improving their material and cultural condition. Hence, the task is to put an end to the fluidity of manpower, to do away with wage equalisation, to organise wages properly and to improve the living conditions of the workers.

That is how matters stand with regard to the second new condition of development of our industry. Let us pass to the third condition.

## III THE ORGANISATION OF WORK

I have said that it is necessary to put an end to the fluidity of manpower, to retain the workers in the factories. But retaining the workers in the factories is not all; the matter does not end there. It is not enough to put an end to the fluidity of manpower. We must provide the workers with such working conditions as will enable them to work efficiently, to increase productivity and to improve the quality of the products. Consequently, we must so organise work in the factories as to bring about an increase in labour productivity from month to month, from quarter to quarter.

Can it be said that the present organisation of work in our factories meets the modern requirements of production? Unfortunately, this cannot be said. At all events, we still have a number of factories where work is organised abominably, where instead of order and co-ordination of work there is disorder and muddle, where instead of responsibility for the work there is absolute irresponsibility, lack of personal responsibility. What is meant by lack of personal responsibility? It is the absence of any responsibility for work that is entrusted to one, the absence of responsibility for machinery and tools. Naturally, when there is no personal responsibility there can be no question of any important increase in the productivity of labour, of any improvement in the quality of production, of the exercise of care in handling machinery and tools. You know what lack of personal responsibility led to on the railways. It is leading to the same result in industry. We have abolished the system under which there was lack of personal responsibility on the railways and have thus improved their work. We must do the same in industry in order to raise its work to a higher level.

Formerly, we could “manage” somehow or other with the bad organisation of work that goes naturally with lack of personal responsibility, with no worker being responsible for a particular concrete job. Now it is another matter. Now the situation is completely different. With the present vast scale of production and the existence of giant enterprises, lack of personal responsibility has become a scourge of industry that is jeopardising all our achievements in the factories in the sphere of production and organisation.

What enabled lack of personal responsibility to become the rule in a number of our factories? It entered the factories as the illegitimate companion of the uninterrupted working-week. It would be wrong to assert that the uninterrupted working week necessarily leads to lack of personal responsibility in production. If work is properly organised, if each person is made responsible for a definite job, if definite groups of workers are assigned to machines, if the shifts are properly organised so that they are equal in quality and skill—given such conditions, the uninterrupted working-week leads to a tremendous increase in labour productivity, to an improvement in quality of work and to eliminating lack of personal responsibility. Such is the case on the railways, for example, where the uninterrupted working-week is now in force, but where there is no longer lack of personal responsibility. Can it be said that the position in regard to the uninterrupted working-week is equally satisfactory in industrial enterprises? Unfortunately, this can not be said. The fact of the matter is that a number of our factories adopted the uninterrupted working-week too hastily, without preparing suitable conditions for it, without properly organising shifts more or less equal in quality and skill, without making each worker responsible for a particular concrete job. The result is that the uninterrupted working-week, left to itself, has given rise to lack of personal responsibility. The result is that in a number of factories we have the uninterrupted working-week on paper, in words, and lack of personal responsibility not on paper, but in actual operation. The result is that there is no sense of responsibility for the job, machinery is handled carelessly, large numbers of machine tools break down, and there is no incentive for increasing the productivity of labour. It is not for nothing that the workers say: “We could raise the productivity of labour and improve matters; but who is going to appreciate it when nobody is responsible for anything?”

It follows from this that some of our comrades were a little hasty in introducing the uninterrupted workingweek, and in their hurry distorted it and transformed it into a system of lack of personal responsibility. There are two ways of putting an end to this situation and of doing away with lack of personal responsibility. Either change the method of carrying out the uninterrupted working week so that it does not result in lack of personal responsibility, as was done on the railways. Or, where the conditions do not favour this, abandon the nominal uninterrupted working week, temporarily adopt the interrupted, six-day week, as was recently done in the Stalingrad Tractor Works, and prepare the conditions so as to return, should the need arise, to a real, not nominal, uninterrupted working-week; to return eventually to the uninterrupted working-week, but not to lack of personal responsibility.

There is no other way.

There can be no doubt that our economic executives understand all this very well. But they keep silent. Why? Because, evidently, they fear the truth. But since when have Bolsheviks begun to fear the truth? Is it not true that in a number of factories the uninterrupted working-week has resulted in lack of personal responsibility and has thus been distorted to an extreme degree? The question is: Who wants such an uninterrupted workingweek? Who dares assert that the preservation of this nominal and distorted uninterrupted working-week is more important than the proper organisation of work, than increased productivity of labour, than a genuine uninterrupted working-week, than the interests of our socialist industry? Is it not clear that the sooner we bury the nominal uninterrupted working-week the sooner shall we achieve a proper organisation of work?

Some comrades think that we can do away with the lack of personal responsibility by means of incantations and high sounding speeches. At any rate, I know a number of economic executives who in their fight against lack of personal responsibility confine themselves to speaking at meetings now and again, hurling curses at the lack of personal responsibility, apparently believing that after such speeches lack of personal responsibility is bound to disappear automatically, so to speak. They are grievously mistaken if they think that lack of personal responsibility can be done away with by speeches and incantations. No, comrades, lack of personal responsibility will never disappear of itself. We alone can and must put an end to it; for it is you and I who are at the helm and it is you and I who are answerable for everything, including lack of personal responsibility. I think that it would be far better if our economic executives, instead of making speeches and incantations, spent a month or two at some mine or factory, studied all details and “trifles” relating to the organisation of work, actually put an end there to lack of personal responsibility and then applied the experience gained at this enterprise to other enterprises. That would be far better. That would be really fighting against lack of personal responsibility, fighting for the proper, Bolshevik organisation of work, for the proper distribution of forces in our enterprises. Hence, the task is to put an end to lack of personal responsibility, to improve the organisation of work and to secure the proper distribution of forces in our enterprises.

That is how matters stand with regard to the third new condition of development of our industry. Let us pass to the fourth condition.

## IV A WORKING-CLASS INDUSTRIAL

The situation has also changed in regard to the administrative staff of industry in general, and in regard to the engineering and technical personnel in particular. Formerly, the situation was that the main source of supply for all our industry was the coal and metallurgical base in the Ukraine. The Ukraine supplied metal to all our industrial regions: both to the South and to Moscow and Leningrad. It also supplied coal to the principal enterprises in the U.S.S.R. I leave out the Urals because the relative importance of the entire Urals was very small compared with the Donets Basin. Accordingly, we had three main centres for training an administrative staff for industry: the South, the Moscow district and the Leningrad district. Naturally, under those conditions we could somehow manage with the very small engineering and technical forces that were all that our country could have at its disposal at that time. That was the position in the recent past.

But the situation is now quite different. Now it is obvious, I think, that with the present rate of development and gigantic scale of production we are already unable to make do with the Ukrainian coal and metallurgical base alone. As you know, the supply of Ukrainian coal and metal is already in adequate, in spite of the increase in their output. As you know, we have been obliged, as a result of this, to create a new coal and metallurgical base in the East—the Urals-Kuznetsk Basin. As you know, our work to create this base has been not without success. But that is not enough. We must, further, create a metallurgical industry in Siberia itself to satisfy its own growing requirements. And we are already creating it. Besides this, we must create a new base for non-ferrous metals in Kazakhstan and Turkestan. Finally, we must develop extensive railway construction. That is dictated by the interests of the U.S.S.R. as a whole—by the interests of the border republics as well as of the centre.

But it follows from this that we can no longer make do with the very small engineering, technical and administrative forces of industry with which we managed formerly. It follows that the old centres for training engineering and technical forces are no longer adequate, that we must create a whole network of new centres—in the Urals, in Siberia and in Central Asia. We must now ensure the supply of three times, five times the number of engineering, technical and administrative forces for industry if we really intend to carry out the programme of the socialist industrialisation of the U.S.S.R. But we do not need just any kind of administrative, engineering and technical forces. We need such administrative, engineering and technical forces as are capable of understanding the policy of the working class of our country, capable of assimilating that policy and ready to carry it out conscientiously. And what does this mean? It means that our country has entered a phase of development in which the working class must create its own industrial and technical intelligentsia, one that is capable of upholding the interests of the working class in production as the interests of the ruling class. No ruling class has managed without its own intelligentsia. There are no grounds for believing that the working class of the U.S.S.R. can manage without its own industrial and technical intelligentsia. The Soviet Government has taken this circumstance into account and has opened wide the doors of all the higher educational institutions in every branch of national economy to members of the working class and labouring peasantry. You know that tens of thousands of working-class and peasant youths are now studying in higher educational institutions. Whereas formerly, under capitalism, the higher educational institutions were the monopoly of the scions of the rich—today, under the Soviet system, the working-class and peasant youth predominate there. There is no doubt that our educational institutions will soon be turning out thousands of new technicians and engineers, new leaders for our industries. But that is only one aspect of the matter. The other aspect is that the industrial and technical intelligentsia of the working class will be recruited not only from those who have had higher education, but also from practical workers in our factories, from the skilled workers, from the working-class cultural forces in the mills, factories and mines. The initiators of emulation, the leaders of shock brigades, those who in practice inspire labour enthusiasm, the organisers of operations in the various sectors of our work of construction—such is the new stratum of the working class that, together with the comrades who have had higher education, must form the core of the intelligentsia of the working class, the core of the administrative staff of our industry. The task is to see that these “rank-and-file” comrades who show initiative are not pushed aside, to promote them boldly to responsible positions, to give them the opportunity to display their organising abilities and the opportunity to supplement their knowledge, to create suitable conditions for their work, not stinting money for this purpose. Among these comrades there are not a few non-Party people. But that should not prevent us from boldly promoting them to leading positions. On the contrary, it is particularly these non-Party comrades who must receive our special attention, who must be promoted to responsible positions so that they may see for themselves that the Party appreciates capable and gifted workers. Some comrades think that only Party members may be placed in leading positions in the mills and factories. That is the reason why they not infrequently push aside non-Party comrades who possess ability and initiative and put Party members at the top instead, although they may be less capable and show no initiative. Needless to say, there is nothing more stupid and reactionary than such a “policy,” if one may call it such. It scarcely needs proof that such a “policy” can only discredit the Party and repel non-Party workers from it. Our policy does not by any means lie in converting the Party into an exclusive caste. Our policy is to ensure that there is an atmosphere of “mutual confidence,” of “mutual control” (Lenin), among Party and non-Party workers. One of the reasons why our Party is strong among the working class is that it pursues this policy.

Hence, the task is to see to it that the working class of the U.S.S.R. has its own industrial and technical intelligentsia. That is how matters stand with regard to the fourth new condition of development of our industry. Let us pass to the fifth condition.

## V SIGNS OF A CHANGE OF ATTITUDE AMONG THE OLD INDUSTRIAL

The question of our attitude towards the old, bourgeois industrial and technical intelligentsia is also presented in a new light. About two years ago the situation was that the more highly skilled section of the old technical intelligentsia was infected with the disease of wrecking. More than that, at that time wrecking was a sort of fashionable activity. Some engaged in wrecking, others shielded the wreckers, others again washed their hands of what was going on and remained neutral, while still others vacillated between the Soviet regime and the wreckers. Of course, the majority of the old technical intelligentsia continued to work more or less loyally. But we are not speaking here of the majority, but of the most highly skilled section of the technical intelligentsia. What gave rise to the wrecking movement? What fostered it? The intensification of the class struggle in the U.S.S.R., the Soviet Government’s policy of offensive against the capitalist elements in town and country, the resistance of these elements to the policy of the Soviet

Government, the complexity of the international situation and the difficulties of collective-farm and state-farm development. While the activities of the militant section of the wreckers were augmented by the interventionist intrigues of the imperialists in the capitalist countries and by the grain difficulties within our country, the vacillations of the other section of the old technical intelligentsia towards the active wreckers were encouraged by utterances that were in fashion among the Trotskyite-Menshevik windbags to the effect that “nothing will come of the collective farms and state farms anyway,” that “the Soviet power is degenerating anyway and is bound to collapse very soon,” that “the Bolsheviks by their policy are themselves facilitating intervention,” etc., etc. Besides, if even certain old Bolsheviks among the Right deviators could not resist the “epidemic” and swung away from the Party at that time, it is not surprising that a certain section of the old technical intelligentsia who had never had any inkling of Bolshevism should, with the help of God, also vacillate. Naturally, under such circumstances, the Soviet Government could pursue only one policy towards the old technical intelligentsia—the policy of smashing the active wreckers, differentiating the neutrals and enlisting those who were loyal.

That was a year or two ago.

Can we say that the situation is exactly the same now? No, we cannot. On the contrary, an entirely new situation has arisen. To begin with, there is the fact that we have routed and are successfully overcoming the capitalist elements in town and country. Of course, this cannot evoke joy among the old intelligentsia. Very probably they still express sympathy for their defeated friends. But sympathisers, still less those who are neutral or vacillating, are not in the habit of voluntarily agreeing to share the fate of their more active friends when the latter have suffered severe and irreparable defeat. Further, we have overcome the grain difficulties, and not only have we overcome them but we are now exporting a larger quantity of grain than has ever been exported since the existence of the Soviet power. Consequently, this “argument” of the vacillators also falls to the ground.

Furthermore, even the blind can now see that as regards the front of collective-farm and state-farm development we have gained a definite victory and achieved tremendous successes. Consequently, the chief weapon in the “arsenal” of the old intelligentsia has gone by the board. As for the bourgeois intelligentsia’s hopes of intervention, it must be admitted that, for the time being at least, they have proved to be a house built on sand; Indeed, for six years intervention has been promised, but not a single attempt at intervention has been made. The time has come to recognise that our sapient bourgeois intelligentsia has simply been led by the nose. That is apart from the fact that the conduct of the active wreckers at the famous trial in Moscow was bound to discredit, and actually did discredit, the idea of wrecking.

Naturally, these new circumstances could not but influence our old technical intelligentsia. The new situation was bound to give rise, and did actually give rise, to new sentiments among the old technical intelligentsia. This, in fact, explains why there are definite signs of a change of attitude in favour of the Soviet regime on the part of a certain section of this intelligentsia that formerly sympathised with the wreckers. The fact that not only this stratum of the old intelligentsia, but even definite wreckers of yesterday, a considerable number of them, are beginning in many factories and mills to work hand in hand with the working class—this fact shows without a doubt that a change of attitude among the old technical intelligentsia has already begun. This, of course, does not mean that there are no longer any wreckers in the country. No, it does not mean that. Wreckers exist and will continue to exist as long as we have classes and as long as capitalist encirclement exists. But it does mean that, since a large section of the old technical intelligentsia who formerly sympathised, in one way or another, with the wreckers have now made a turn to the side of the Soviet regime, the active wreckers have become few in number, are isolated and will have to go deeply under ground for the time being.

But it follows from this that we must change our policy towards the old technical intelligentsia accordingly. Whereas during the height of the wrecking activities our attitude towards the old technical intelligentsia was mainly expressed by the policy of routing them, now, when these intellectuals are turning to the side of the Soviet regime, our attitude towards them must be expressed mainly by the policy of enlisting them and showing solicitude for them. It would be wrong and undialectical to continue our former policy under the new, changed conditions. It would be stupid and unwise to regard practically every expert and engineer of the old school as an undetected criminal and wrecker. We have always regarded and still regard “expert-baiting” as a harmful and disgraceful phenomenon.

Hence, the task is to change our attitude towards the engineers and technicians of the old school, to show them greater attention and solicitude, to enlist their cooperation more boldly. That is how matters stand with regard to the fifth new condition of development of our industry. Let us pass to the last condition.

## VI

The picture would be incomplete if I did not deal with one more new condition. I refer to the sources of capital accumulation for industry, for the national economy; I refer to the need for increasing the rate of accumulation. What is the new and special feature of the development of our industry from the point of view of accumulation? It is that the old sources of accumulation are already beginning to be inadequate for the further expansion of industry; that it is necessary, therefore, to seek new sources of accumulation and to reinforce the old sources if we really want to maintain and develop the Bolshevik tempo of industrialisation.

We know from the history of the capitalist countries that not a single young state that desired to raise its industry to a higher level was able to dispense with external aid in the form of long-term credits or loans. For this reason the capitalists in the Western countries point-blank refused credits or loans to our country, in the belief that the lack of credits and loans would certainly prevent the industrialisation of our country. But the capitalists were mistaken. They failed to take into account the fact that our country, unlike the capitalist countries, possesses certain special sources of accumulation sufficient to restore and further develop our industry. And indeed, not only have we restored our industry, not only have we restored our agriculture and transport, but we have already managed to set going the tremendous work of reconstructing heavy industry, agriculture and transport. Of course, this work has cost us many thousand million rubles. Where did we get these thousands of millions from? From light industry, from agriculture and from budget accumulations. This is how we managed until recently. But the situation is entirely different now. Whereas previously the old sources of capital accumulation were sufficient for the reconstruction of industry and transport, now they are obviously becoming inadequate. Now it is not a question of reconstructing our old industries. It is a question of creating new, technically well-equipped industries in the Urals, in Siberia, in Kazakhstan. It is a question of creating new, large scale farming in the grain, livestock and raw material regions of the U.S.S.R. It is a question of creating a new network of railways connecting the East and West of the U.S.S.R. Naturally, the old sources of accumulation cannot suffice for this gigantic task. But that is not all. To it must be added the fact that owing to inefficient management the principles of business accounting are grossly violated in a large number of our factories and business organisations. It is a fact that a number of enterprises and business organisations have long ceased to keep proper accounts, to calculate, to draw up sound balance-sheets of income and expenditure. It is a fact that in a number of enterprises and business organisations such concepts as “regime of economy,” “cutting down unproductive expenditure,” “rationalisation of production” have long gone out of fashion. Evidently they assume that the State Bank “will advance the necessary money anyway.” It is a fact that production costs in a number of enterprises have recently begun to increase. They were given the assignment of reducing costs by 10 per cent and more, but instead they are increasing them. Yet what does a reduction in the cost of production mean? You know that reducing the cost of production by one per cent means an accumulation in industry of 150,000,000 to 200,000,000 rubles. Obviously, to raise the cost of production under such circumstances means to deprive industry and the entire national economy of hundreds of millions of rubles. From all this it follows that it is no longer possible to rely solely on light industry, on budget accumulations and on revenue from agriculture. Light industry is a bountiful source of accumulation, and there is every prospect of its continuing to expand; but it is not an unlimited source. Agriculture is a no less bountiful source of accumulation, but now, during the period of its reconstruction, agriculture itself requires financial aid from the state. As for budget accumulations, you know yourselves that they cannot and must not be unlimited. What, then, remains? There remains heavy industry. Consequently, we must see to it that heavy industry —and above all its machine-building section—also provide accumulations. Consequently, while reinforcing and expanding the old sources of accumulation, we must see to it that heavy industry—and above all machine-building—also provide accumulations. That is the way out.

And what is needed for this? We must put an end to inefficiency, mobilise the internal resources of industry, introduce and reinforce business accounting in all our enterprises, systematically reduce production costs and increase internal accumulations in every branch of industry without exception.

That is the way out.

Hence, the task is to introduce and reinforce business accounting, to increase accumulation within industry.

## VII NEW METHODS OF WORK, NEW METHODS OF MANAGEMENT

Such, comrades, are the new conditions of development of our industry. The significance of these new conditions is that they are creating a new situation for industry, one which demands new methods of work and new methods of management. Hence:
a) It follows, therefore, that we can no longer count, as of old, on an automatic influx of manpower. In order to secure manpower for our industries it must be recruited in an organised manner, and labour must be mechanised. To believe that we can do without mechanisation, in view of our tempo of work and scale of production, is like believing that the sea can be emptied with a spoon.

b) It follows, further, that we cannot any longer tolerate the fluidity of manpower in industry. In order to do away with this evil, we must organise wages in a new way and see to it that the composition of the labour force in the factories is more or less constant. c) It follows, further, that we cannot any longer tolerate lack of personal responsibility in industry. In order to do away with this evil, work must be organised in a new way, and the forces must be so distributed that every group of workers is responsible for its work, for the machinery, and for the quality of the work.

d) It follows, further, that we can no longer manage, as of old, with the very small force of old engineers and technicians that we inherited from bourgeois Russia. In order to increase the present rate and scale of production, we must ensure that the working class has its own industrial and technical intelligentsia.

e) It follows, further, that we can no longer, as of old, lump together all the experts, engineers and technicians of the old school. In order to take into account the changed situation we must change our policy and display the utmost solicitude for those experts, engineers and technicians of the old school who are definitely turning to the side of the working class. f) It follows, lastly, that we can no longer, as of old, manage with the old sources of accumulation. In order to ensure the further expansion of industry and agriculture we must tap new sources of accumulation; we must put an end to inefficiency, introduce business accounting, reduce production costs and increase accumulation within industry. Such are the new conditions of development of industry, which demand new methods of work and new methods of management in economic construction. What is needed in order to ensure management along new lines?

First of all, our economic executives must understand the new situation; they must study concretely the new conditions of development of industry and reform their methods of work to meet the requirements of the new situation.

Further, our economic executives must direct their enterprises not “in general,” not “in the abstract,” but concretely, specifically; they must approach every question not from the standpoint of general phrases, but in a strictly business-like manner; they must not confine themselves to formal written instructions or general phrases and slogans, but study the technique of the business and enter into details, into “trifles,” for it is out of “trifles” that great things are now being built. Further, our present unwieldy combines, which sometimes consist of as many as 100 to 200 enterprises, must each be immediately split up into several combines. Obviously, the chairman of a combine who has to deal with a hundred or more factories cannot really know those factories, their potentialities and their work. Obviously, if he does not know those factories he is not in a position to direct them. Hence, to enable the chairman of a combine to study the factories thoroughly, and direct them, he must be relieved of some of the factories; the combine must be split up into several smaller ones, and the combine headquarters must be brought into closer contact with the factories.

Further, our combines must substitute one-man management for board management. The position at present is that there are from 10 to 15 persons on the board of a combine, drawing up documents and carrying on discussions. We cannot go on managing in this way, comrades. We must put a stop to paper “management” and switch to genuine, business like, Bolshevik work. Let one chairman and several vice-chairmen remain at the head of a combine. That will be quite enough for its management. The other members of the board
should be sent to the factories and mills. That will be far more useful, both for the work and for themselves. Further, the chairmen and vice-chairmen of combines must pay more frequent visits to the factories, stay and work there for longer periods, acquaint themselves more closely with the personnel in the factories and not only teach the local people, but also learn from them. To think that you can now direct by sitting in an office, far away from the factories, is a delusion. In order to direct the factories you must come into more frequent contact with the staffs in those factories, maintain live contact with them.

Finally, a word or two about our production plan for 1931. There are certain near-Party philistines who assert that our production programme is unrealistic, that it cannot be fulfilled. They are somewhat like Shchedrin’s “sapient gudgeons” who are always ready to spread “a vacuum of ineptitude” around themselves. Is our production programme realistic or not? Most certainly, it is. It is realistic if only because all the conditions necessary for its fulfilment are available. It is realistic if only because its fulfilment now depends solely on ourselves, on our ability and willingness to take advantage of the vast opportunities at our disposal. How else can we explain the fact that a whole number of enterprises and industries have already overfulfilled their plans? That means that other enterprises and industries, too, can fulfil and overfulfil their plans. It would be foolish to think that the production plan is a mere enumeration of figures and assignments. Actually, the production plan is the living and practical activity of millions of people. The reality of our production plan lies in the millions of working people who are creating a new life. The reality of our programme lies in living people, you and I, our will to work, our readiness to work in the new way, our determination to fulfil the plan. Have we that determination? Yes, we have. Well then, our production programme can and must be fulfilled. (Prolonged applause.)

Pravda, No. 183,

July 5, 1931