COMPERATIVE HISTORY OF FINANCE

EVOLUTION OF COLLECTIVE FARMS

AND STATE FARMS IN U.S.S.R

PAPER REPORT

 Submitted to: Prof. Dr. Murat ÇİZAKÇA

Prepared by ENDER BOYAR

1.     INTRODUCTION

It is very acceptable that the last century was characterized by the opposite ideologies. While one side was in the favour of capitalism under the leadership of USA, the other side was recognised for approaching socialist type of governing. Basically, these two states were the most powerful countries and because of their opposite thoughts they even led to a Cold War crises in the last century. It is worth mentioning that after 90’s there was a collapse of communism, and it is now considered only as a historical data. However, disputes about these two extremes always exist among the thinkers. In light of the mentioned above, in this paper, I will focus on the basic aspects of agricultural sector in the Soviet Union under the influence of Communist system and I will try to highlight the evolution of farming sector in Soviet Union for the last century. Also, at the very last comparison among several post- Communist states have been provided in terms of the farming sector in these countries. Included countries are Kazakhstan and Uzbekistan.

The paper begins with the emphasis on the transformation of Soviet Agriculture towards a system of large collectivisation in the beginning of the last century and now in the next paragraph I will focus on these issues.

2.     COLLECTIVIZATION OF THE FARMS

In November 1927, Joseph Stalin launched his "revolution from above" by setting two extraordinary goals for Soviet domestic policy: rapid industrialization and collectivization of agriculture. His aims were to erase all traces of the capitalism that had entered under the New Economic Policy and to transform the Soviet Union as quickly as possible, without regard to cost, into an industrialized and completely socialist state.

Stalin's First Five-Year Plan, adopted by the party in 1928, called for rapid industrialization of the economy, with an emphasis on heavy industry. It set goals that were unrealistic-- a 250 percent increase in overall industrial development and a 330 percent expansion in heavy industry alone. All industry and services were nationalized, managers were given predetermined output quotas by central planners, and trade unions were converted into mechanisms for increasing worker productivity. Many new industrial centers were developed, particularly in the Ural Mountains, and thousands of new plants were built throughout the country. But because Stalin insisted on unrealistic production targets, serious problems soon arose. With the greatest share of investment put into heavy industry, widespread shortages of consumer goods occurred.

The First Five-Year Plan also called for transforming Soviet agriculture from predominantly individual farms into a system of large state collective farms. The Communist regime believed that collectivization would improve agricultural productivity and would produce grain reserves sufficiently large to feed the growing urban labor force. The anticipated surplus was to pay for industrialization. Collectivization was further expected to free many peasants for industrial work in the cities and to enable the party to extend its political dominance over the remaining peasantry.

Stalin focused particular hostility on the wealthier peasants, or kulaks (Kulaks wiil be explained in the next part). About one million kulak households (some five million people) were deported and never heard from again. Forced collectivization of the remaining peasants, which was often fiercely resisted, resulted in a disastrous disruption of agricultural productivity and a catastrophic famine in 1932-33. Although the First Five-Year Plan called for the collectivization of only twenty percent of peasant households, by 1940 approximately ninety-seven percent of all peasant households had been collectivized and private ownership of property almost entirely eliminated. Forced collectivization helped achieve Stalin's goal of rapid industrialization, but the human costs were incalculable.

Between 1929 and 1935, 16.6 million former peasants left the countryside and moved to urban centers, where they became part of the expanding labor force of Soviet industry. This was, of course, a highly desirable development from the point of view of the Communist elite which ruled in the name of the "dictatorship of the proletariat."

3.     HISTORY OF AGRICULTURE IN USSR

It is extremely important that we begin the historical consideration of the types of farming in Russia by focusing on the Kulaks. These have significant effects on the well being of the society because Kulaks are the rich landlords. For this reason, these  

Kulaks also had served a dominant role in the revolution ages. Now, let me consider some details about the evolution of Kulaks. 

Kulak means "Fist" in Russian. It is name for the landlords of rural Russia.

The origin of Kulak is as follows: Land tenure in Feudal Russia had been arranged where land was split into long narrow strips; the serfs tended two strips side by side; one for the landlord, the other for themselves.

After serfdom was abolished in 1861, the land the serfs had once cultivated for themselves was now owned by the peasant commune, formed from those peasants who were once serfs to a common landlord. The landlords retained the lands that were not used for maintaining the serfs (eg. the majority of their former lands) — still in strips next to the communal land. The landlords also kept all their forested and pastoral lands. Thus, serfs had once been able to graze their animals (commonly a cow and horse) on pastoral land, now they could not. The newly "emancipated" peasants were also stranded from the most prized commodity of Russia throughout most of the year — firewood.

From these conditions was born the Kulak, who imposed on the peasantry a tax to use their pastoral lands. The peasant communes responded by lying fallow some of their own land and turning it into pasture. Their remained, however, strips of the landlord's land running throughout their community, with which the kulak established a system of tolls for each animal that crossed over his land. On the matter of wood, peasants had little choice but to work the kulak's land in return for a payment that would allow them to cut timber from the kulak's forest.

This relationship throughout Russia gave birth to the first revolutionary parties in Russia.

Kulaks in WWI: Throughout the early twentieth century kulaks bought communal land where they could, but it was difficult to do so; the communes refused to sell their land despite threats and pressure. During World War I, kulaks came into a new era.

Kulaks bribed local officials to prevent conscription into the army, and lied in wait for the field of opportunity to soon open up. While hundreds of thousands of peasants were sent to the slaughter on the front, kulaks grabbed up the communal land in a free-for-all.

By 1917, the success of kulaks cannot be seen more clearly than in the amount of land they owned: over nine-tenths of Russia's arable land.

The most valuable commodity throughout the war was grain, and the kulaks understood this with absolute clarity: food prices climbed higher than any other commodity during the war. In 1916, food prices accelerated three times higher than wages, despite bumper harvests in both 1915 and 1916. The price of grain in 1916, already at two and a half rubles per pud [1] , was anticipated to raise up to twenty five rubles per pud. Hoping to raise prices, the kulaks hoarded their food surplus as their lands continually increased.

Throughout 1916, the average urban labourer ate between 200 and 300 grams of food a day. In 1917, the urban population of Russia were allowed to buy only one pound of bread per adult, per day. Workers sometimes went days without food.

As a result of the Soviet Land Decree of October 26, 1917, when the peasants took back their land from the kulaks, food slowly came back into the cities again. Though the Kulaks were overwhelmed by the peasants at home and those returning from the front, many responded later in the year, during the coming Civil War.[...]

In the below included table it is provided evidence of how land have been taken back from the Kulaks. 

4.     AGRICULTURAL UNITS

As we mentioned above with the Soviet revolution collectivisation took place in the farming system in U.S.S.R. Now I will consider the most common types of agricultural units in U.S.S.R. These were named kolkhoz and sovkhoz.

Farming in the U.S.S.R. was fully socialized, the two basic agricultural units being the collective and the state farm (kolkhoz and sovkhoz, respectively). The collective farm was obliged to meet a delivery quota but made its own decisions on profit sharing. State farms were owned and operated by the state, and their employees were paid a regular wage that was not usually significantly affected by their performance. From the 1950s the number and importance of state farms progressively increased, often at the expense of collectives. In general, Soviet agriculture was notoriously inefficient from its inception and was long plagued by poor harvests and occasional crop failures owing to inefficient use of land, the inadequate level of mechanization, and poor storage and distribution facilities. The Soviet Union was often dependent on Western imports for its food requirements.

Now, in the next part we will focus on some more important details about the functions of Kolkhozes and Sovkhozes.

a. KOLKHOZ (Collective Farm)

Collective Farms in the Soviet Union operated by peasants who were paid on the basis of the labour contributed.

Stalin emphasized the need of the liquidation of the Kulaks, who dominated and controlled peasants throughout the country, and instead to replace that with the domination of the peasantry to the state. On October 1, 1927, 286,000 families were in the kolkhozy. On June 1 1929, the figure had reached 1,008,000.

The collective farms were controlled by government officials (kolkhoz chairmen) who were elected by the peasants of the commune; however such elections were not without corruption and coercion. Individual households (worker's property) were retained in the collective farm, and by 1935 part of the land used by the entire collective farm was divided to allow each household garden plots.

Beginning in 1949, a drive to increase the size of the kolkhoz began; before World War II the average size had been 75 households per kolkhoz, by 1960 it had become 340 households. Before 1958, heavy equipment (largely due to a scarcity) was distributed by the government to the collective farms. Beginning in 1958, the kolkhoz gained control over how to best use their own resources in a more robust economy. Central planning remained, the government would assign a certain goal for each region to attain, which would be sold to the state at a fixed price. By 1961, production in excess of the necessary quotas for feeding the nation, both from the collective farm and from individual garden plots, could be sold on the kolkhoz market.

After the destruction of the Soviet Union, the kolkhoz was forcibly privatised.

The dynamics of kolkhozes are provided in table 1, 2 and 3

Table 1: Dynamics of expanding of kolkhozes (without fishing)

Table 2: Growth of public wealth of kolkhozes

Table 3: Ratio of kolkhozes in gross and commercial agricultural products.

b.      SOVKHOZ (State Farm)

Sovkhoz (state farms, Soviet farms) is a large mechanized socialistic state enterprise in a rural economy of USSR.  They were based on a state-owned land and other means of production, and run on the basis of economical self-support. They have their own regulations, independent balance sheet, and are treated as juridical entities. Many sovkhozes are included into various production enterprises as well as kolkhozes.

By 1974, there were 17717 sovkhozes (1579 were engaged in the production of grain-crops, 282 - sugar bit growing, 300 - cotton, 2643 – grape-type growing, vegetable farms, potatoes, etc., 952 – pig breeding, 1385 – sheep breeding, 108 – poultry breeding, 94 – horse breeding, 108 – deer-raising, 135 – beast.

The dynamics of sovkhozes are described in details in the table 4 and 5

Table 4: Main indicators of development of sovkhozes

Table 3: Ratio of sovkhozes and other state enterprises in gross and commercial agricultural products. %

Lenin proved the need for state agricultural enterprises during the period of preparations to socialistic revolutions. In “April Thesis” of Lenin (1917), he proposed to organize state enterprises on the basis of large landlords’ land to be taken after revolutions. He expected these enterprises to be the model for socialistic publicly owned production types. The formation of sovkhozes started after the announcement of the Decree on Land (27 October, 1917).  The first sovkhozes were state stud-farms, and starting from 1918 on the basis of government resolutions, many kinds of sovkhozes appeared which were specialized in different fields such as bit been, livestock breeding, etc. By the end of 1922, there were 4316 sovkhozes with 3324 thousand hectares. The organization of sovkhozes was deemed to be an important part of preparations to collectivization of agriculture. Sovkhozes were not only supposed to strengthen state food stocks but also to be the model of civilized way of house-keeping providing them daily support in keeping bloodstock, sorted seed resources, technical support, and all these were supposed to facilitate organization of farmers into larger collective farms. As the program of socialistic renovation of agriculture progressed, the role of sovkhozes and later, kolkhozes, grew into production facilities. Many sovkhozes used for this purpose special machines and tractors. On the base of tractor fleet of a sovkhoz named after Shevchenko, the first machine and tractor station (MTS) was organized in 1928. In April of 1928 Politburo approved the resolution on enlarging and supporting of existing sovkhozes, as well as organizing and developing new (grain-crop growing) sovkhozes.

The growth of sovkhozes was interrupted by WWII during 1941-1945. The fascist occupants caused a great damage to the development of state farming. They destroyed and robbed more than 1876 (45% of total) sovkhozes in occupied territories. After the WWII, destroyed sovkhozes were restored, and farm production activities exceeded the pre-war level by 1950. According to the resolution of plenum of Central Committee of the CPSU (1954) on increasing the grain production by developing virgin and long fallow lands by 1954-55, 425 new highly mechanized sovkhozes were formed in the virgin lands of Kazakhstan, Siberia, Volga region, Ural which later became the main providers of bread. During the period of 1954-74 virgin lands produced about 31 billion poods (16,34 kg) of high quality and cheap grain and other kinds of farm products.

The March plenum of CC of the CPSU (1965) was of historical significance in the development of sovkhozes, which worked out economical measures of developing farm production, strengthened material-technical base of sovkhozes, established stable 5-year plans of selling farm products to the state, the stimulation of above the plan purchases, the perfection of labor and reward systems in sovkhozes.         

c. Differences between SOVKHOZES AND KOLKHOZES

 From the very beginning the Soviet authorities attached special importance to the state-financed sovkhozes (state farms) and intended them to serve as models for the overwhelming majority of peasants in the kolkhozes. Sovkhoz performance, however, fell short of official expectations, though their efficiency has improved and their relative number and importance has grown since the mid-fifties. On the kolkhoz, in contrast to the sovkhoz, the land is socialized but parts of it are allocated to individual kolkhoznik households for private use.

Until recently kolkhoz members were obliged to work for their collective farm a minimum number of days a year, which generally varied between 100 and 150 days (60 to 100 prior to 1954). In the 1960's kolkhoz members were assured partial payment of their salary in advance of the harvest. Previously they received only a share of the kolkhoz's income (based on a complicated calculation of workdays) after the harvest and after all compulsory deliveries and payments to the state had been met.

State control over the kolkhozes has been exercised indirectly, not directly as has been the case for sovkhozes and factories. Kolkhoz members, in theory at least, elect their own chairmen and manage their own internal affairs' The kolkhozes' freedom of action, however, has always been very limited because the majority of kolkhoz chairmen are Communists (94% in 1959) and because there is no way for the kolkhozes to avoid meeting production and delivery quotas prescribed by the Soviet state.

Furthermore, until 1958 state operated Machine Tractor Stations (MTS) supplied most of the agricultural machinery used by the kolkhozes and served as a major medium through which the state disseminated propaganda among the peasants and controlled their activities. After the Machine Tractor Stations were disbanded in 1958, various agencies of the Ministry of Agriculture took over many of the control functions formerly exercised by the MTS.

5.     BENEFITS OF COLLECTIVITATION

 After this revolution in the agricultural farming which led to the collectivisation of the farms in Russia through the types of Kolhkos and Solhozes there has been both valuable points but at the same time some negative effects are coming out as a consequence from the collectivisation. Firtsly, I will mention some of the favourable points that collectivisation has brought within itself. The main points are as follows;

The Soviet government's successes in the sphere of the collective-farm movement are now being spoken of by everyone. Even our enemies are forced to admit that the successes are substantial. And they really are very great. It is a fact that by February 20 of this year 50 per cent of the peasant farms throughout the U.S.S.R. had been collectivised. That means that by February 1930, we had overfulfilled the five-year plan of collectivisation by more than 100 per cent. It is a fact that on February 28 of this year the collective farms had already succeeded in stocking upwards of 36,000,000 centners, i.e., about 220,000,000 puds, seed for the spring sowing, which is more than 90 per cent of the plan. It must be admitted that the accumulation of 220,000,000 puds of seed by the collective farms alone - after the successful fulfilment of the grain-procurement plan - is a tremendous achievement. (From: Pravda, March 2, 1930.)

Gorlovsky residents tend to blame their woes on capitalism, which destroyed Soviet-era collective farms and did away with laws that punished lazy workers. "Before there was discipline and now there is freedom," said Arkady Bolshakov, a pensioner who devoted his life to tending animals on the farm.

The word freedom is invariably pronounced with bitterness and is widely interpreted as meaning freedom to hit the bottle whenever people can get their hands on one. Officials and villagers agree drinking has taken on epic proportions since the Soviet system of obligatory employment collapsed and collective farms went out of business.

Today, many rural families live off the pensions of their grandparents, whose meager funds are often plundered by their alcoholic children while their own offspring go hungry for months on end, say Gorlovo residents. "These days they beat their old folk to extort money for vodka," Bolshakov said ruefully.

"There are no moral or legal incentives to stop people drinking," said Gennady Suvorov, head of the local government administration. "And to buy vodka they would rather steal than work."

Two local men recently ripped five miles of copper wire off power lines leading to their village, then sold it as scrap metal for a paltry 3,000 rubles (US$100). "We caught them after the money had already been spent on drink," said Suvorov. "There was nothing to take from them or their homes in compensation. It cost us 100,000 rubles to repair the damage."

Gorlovsky women are particularly pleased with the scheme that makes sure that their children always have something to eat no matter what the men's drinking habits.

"It is good for everyone," said accountant Valentina Koneva, adding that despite her husband having a soft spot for vodka, she usually managed to get her hands on the family's cash first and used it to buy clothes rather than spirits. "In many other households it is a matter of children having something to eat or not," she said.

Male farm workers said they were sometimes frustrated at not being able to make full use of their wages but generally agreed that the system was good for their families and kept them fit for work. "If you pay all the money in cash, who will work then?" a sawmill operator asked, laughing.

Matantsev, who has been occasionally criticized for allegedly infringing on workers' rights, said that last year he attempted to introduce full cash payments. But the plan had to be abandoned after work came to a complete halt in teams paid in cash. "On New Year's Eve we paid 70 percent in cash, as it is such a big holiday and people have to celebrate," he said with a sigh. "The result? Nobody turned up for work before January 10."

6.     FAILURE OF COLLECTIVIZATION

In terms of agricultural productivity, the results of collectivisation have not been spectacular. During the First Five-Year Plan cattle herds declined almost 50% and the gross farm output approximately 10%. By 1940 the per capita production of fruit crops, meat, and eggs still did not attain the level of 1928, while it was as late as 1957 before the number of cattle was restored to the pre-collectivisation level.

It was especially after 1953, when Khrushchev publicity acknowledged that Soviet agriculture had failed to meet the food needs of a growing population that Soviet economic planners began to concern themselves seriously with the problem of how to expand agricultural production. They paid particular attention to the expansion of wheat production. Because of the increase in the use of mechanical horsepower and in the total area sown (especially in Kazakhstan), wheat production rose from approximately 30 million tons in 1950 to highs of 67.6 (1958), 100 (1966), and 80 (1967) million tons during the decade 1958-1967.

The disastrous drought and crop failure of 1963, however, grimly reminded Soviet leadership that the overzealous extension of the area under cultivation in the ''virgin lands'' of Kazakhstan cannot be continued indefinitely without risking the transformation of this area into a vast dust bowl' In regard to other agricultural products, rising productivity and output have resulted chiefly from concessions made by the government to the peasants. Prices paid for the procurement of agricultural products have been raised, restrictions on the use of private plots liberalized, taxes reduced' and pensions and cash payments in advance of the harvest authorized for the agricultural population.

Such measures have given the kolkhozniki new incentives to supply Russian towns with the vegetables, fruit, meat, butter, and eggs needed to feed the working population. The productivity of Russian agriculture, however, remains on a low level in comparison with that of many other countries and requires an agricultural labor force six times larger than that of the United States to produce a smaller total agricultural output. Furthermore, much of this output comes from private plots, which in 1964 accounted for 3% of the area under cultivation but produced more than 40% of the milk and meat output, 60% of the potato crop, and 73% of the egg production.

In the very last we point to the need that we should emphasize the current situation of the farming sector in the region which was used to be known as USSR once upon a time. In this part we focused on the situation of the farming sector for the last 10 years in U.S.S.R. and some of it’s ex republics. Let me just remind that this period is the time of privatisation of the former soviet Union republics. Therefore we examined how farming sector adjusted itself to the changing conditions in the outside world and below are some important facts.

7.     COLLECTİVE FARMS NOW

The official view of how it was: happy peasants brandishing record harvests. In fact, agriculture had been in sharp decline from the 1970s, long before the break-up of the Soviet Union. Ever wonder what happened to the good old collective farm, one of the icons of Soviet society that some 10 million kulaks died to create in the 1920s and 1930s?

Well most of them are still there, frayed at the edges and living in the same uncertain world as the rest of New Russia but still basically there. In fact, state subsidies to the agricultural sector actually increased after the collapse of the Soviet Union! This was because food prices have risen so much less than the price of industrial products since 1990 that farmers have found themselves absolutely unable to buy seeds, fertilisers and equipment to continue production. The result was that the state had to intervene with subsidies to prevent further collapse.

Some things have changed in Russian farming. After years of wrangling and politicking at both local level and in the Russian parliament, about 8 percent of farmland is now in private hands. More importantly, that 8 percent produces about 40 percent of Russia's agricultural output. But the basic unit of Russian farming has remained the collective farm in one form or another. This is how it happened.

In the first days of the Russian Federation in 1992, all 26,000 of the country's collective farms were asked to meet and decide on the future of their farms. Agriculture was on its knees, largely for historical reasons. The whole of Marxist theory rested on revolution in an industrial society and when the Bolsheviks, in Lenin's phrase, 'picked up power off the streets' of chaotic Russia in 1917 they harboured a deep inferiority complex about Russia's agricultural economy.

The Five Year Plans were always to do with increasing industrial production - Stalin and his successors saw that as the way to kick-start the Soviet Union into the 20th century. Agriculture was merely there in a supporting role. In order to create the collective farms, Stalin basically starved and shot an estimated nine million kulaks. So, Soviet agriculture went into particularly severe decline in the 1980s, even while Mikhail Gorbachev, who made his reputation as an agricultural economist, came to power.

In 1992, some 7,000 farms opted to remain state-owned collective farms as before. Another 9,000 registered as companies but that didn't mean they altered their practises very much - although it was in theory possible for a worker on one of these farms to buy his share and operate it as his own independent farm, laws introduced by anti-reformists in the Duma made this very difficult in practice. For example, a peasant had to get the permission of all the other members on his collective farm before he could go private. And he wasn't allowed to pass it on to anybody else; he had to sell it back to the collective farm if he was going to sell it to anyone. Most, but not all, of these restrictive measures have since been rescinded in the Duma but only after great struggle.

Privatisation of both food production and distribution has continued but slowly. For example, there are as yet very few private well-known brands for Russian food products in shops and supermarkets, while foreign brands are better known. Change is creeping and with scatter impact: in some areas of the huge Russian Federation, state authorities are still rationing food at low prices, while in others private production has now taken the upper hand.

Below there is evidence also for the farming situation in Uzbekistan and Kazakhstan and thus we are likely that we can compare the differences that arise amongst these countries. There are some important points made on the Uzbekistan’s and Kazakhstan’s `s farming sector.

KAZAKSTAN

Jhambyl State Farm began to break up in 1991, when Kazakhstan passed its initial legislation  on agricultural privatisation. By 1995, it had become the Jhambyl Cooperative Farm, a private, commercial corporation and one of nineteen cooperative farms that replaced the fifteen satset farms in the Raion. Many of Jhambyl State Farm’s workers broke away from the cooperative at this time to become independent peasant farmers. The Raion now has 613 independent farmers, and the number continues to grow. Only about a quarter of those possess irrigated lands, however (the rest are livestock herders).

During the privatisation process, land belonging to the state farm was allocated to families according to a formula devised by a “land commission” created by the farm. Active and retired farm workers each received 2,63 irrigated hectares. Civil servants who worked on the farm (teachers, hospital employees, etc) received 1,82 irrigated hectares each. Finally, children and people who lived on the farm but were employed elsewhere received 0,23 irrigated hectares each. The formula favored larger families, who received an allocation for each adult and child in the family. The farmers we interviewed had farms of 6,8,10,12,14 and 20 hectares, for an average of 12 hectares. The quality of  the specific pieces of land assigned to individual depended on the number of years he or she had worked on the state farm. In addition to land, each state farm worker received a nominal share in the farm’s  capital stock: buildings, equipment, tools, livestock, etc.

UZBEKISTAN

The Uzbek society and economy are to a significant degree agrarian based. Almost two-thirds of its population lives in the rural area, and, at least, 40 per cent of hard currency revenue comes from the export of cotton.

Uzbekistan has undoubtly benefited from its cotton produce. Statistics shows that of all post-soviet states Uzbekistan experienced the smallest decline in production. This was due to mainly by two factors: (1) the republic's considerable export potential, and (2) the agro-industrial nature of the Uzbek economy. By maintaining control over the cotton sector the Uzbek government has managed to sustain social and economical stability in the country. At the same it should be taken into account that this stability is based on a divided economy. Essentially, at least in its agribusiness sector two relatively self-sufficient economies evolved, which are connected and interwoven, but at the same time each function according to its own inner logic.

The export-oriented sector of Uzbekistan's farm economy features a distinct command character. This sector dwells on the kolkhoz system of production, which has barely changed over the last 10 years. By the time the republic attained independence in 1991, there were 1,137 sovkhozes (state farms) and 971 kolkhozes (collective farms) . After the country moved towards a market economy, formal deregulation was carried out and involved the transformation of sovkhozes into kolkhozes. The meaning of this action was as follows: on the one hand, the intention was to give farms more independence, because in the legal and official viewpoint kolkhozes are still considered to be cooperatives rather than governmental entities. On the other hand, there was need to cease direct government funding of agriculture while retaining control. The principle of financing was slightly altered: from the state budget to bank loans. Now kolkhozes were expected to receive bank credits rather than subsidies from the state budget. Superficially, the economy looked different from the past: it looked more like a market. However, in practice, reform really involved only reorganization of regulatory functions. Such management functions as financing; operative management and distribution of output were separated from each other and institutionalized.

The function of financing was now performed by commercial banks, mainly by "Pakhta-Bank" (for cotton-growing sector) and "Galla-Bank" (for grain production sector), which were fully controlled by the government. In spite of their official status of independent commercial banks, the Central Bank retained full control over their operations. Credit lines for agricultural production have been provided by these banks. The credit is in fact not from their own resources, but from target loans allocated by the Central Bank according to the Government's instructions.

In order to understand how the kolkhoz system functions at the present moment, one has to answer why the government did not go to the logical end in deregulation of rural economy, as, for example, in China. After the disintegration of the USSR, the leadership of the republic suddenly got hold of the reins of government to the country with huge export resources. So they reckoned that they could secure direct control over these resources by maintaining directive management of export-oriented sectors, that is, by preventing the kolkhoz system from collapsing. Receiving contradictory instructions, on the one hand, from the government, and on the other hand, from the market, kolkhozes consequently turned into a symbiosis of directive and market principles of production organization. In general, the elements of directive management prevail. The government, as before, strongly holds kolkhozes on hook, employing the following five leverages of pressure on them. These leverages correspond to the above-mentioned operational, financial and distributive functions in cotton and grain sectors management.

A significant portion of population who retrospectively consider themselves in the soviet past as belonging to middle class, now find themselves among the poor, most of whom can be regarded as so-called the new poor. As indicators of belonging to the new poor, they point out the fact that in order to survive in worsened living conditions they are compelled to sell their property accumulated over many years of their former, relatively wealthy lives. Relatively in the rural area the poor now are those who are selling the only cattle they have and which has been their source of livelihood. Reasons for selling out property and cattle vary from the threat of famine through expenditures for medical services which have suddenly become very dearly priced and heavily burdened family budgets. One member of such impoverished families said that in the past they could afford having meat for their meals every day, while now they buy meat only when someone in the family falls ill - to nourish the ailing relative. But, from the point of view of well being, in the worst situation are rural residents, and, first of all, kolkhoz farmers whose nearly feudal exploitation we already told about. In popular narratives these days, the notion of kolkhozchi (the rank and file workers in kolkhozes) has become synonymous to poverty and is associated with despondency and total deprivation of rights.

REFERENCES

Andrei Shukshin, Reuters, March 05, 2002

http://www.marxist.org/glossary/

http://www.econ.uiuc.edu/~koenker/sov-hist.html

Divided Economy: Kolkhoz System vs Peasant Subsistence Economy in Uzbekistan

by Alisher Ilkhamov

 Robert Conquest, Stalin Breaker of Nations, November 1992

Judith Matloff, Staff writer of The Christian Science Monitor

(http://www.loc.gov/exhibits/archives/coll.html Revelations from the Russian Archives)

Professor Gerhard Rempel, Western New England College.

http://www.tm.mednet.md/M%20ac&hys/Union%20of%20Soviet%20Socialist%20Republics.htm

http://www.galileo.org/schools/vmassey/russia/central_planning.html

Kasenov Kanatbek, Ahmet Dulaty University, Kazakhstan

Экономика сельского хозяйства Казахстана / под ред. Х.Д. Чурина. – Алматы: Казсельхозгиз, 1962. -327 с.

Экономика сельского хозяйства: учебное пособие для ВУЗов. / под ред. И.В. Поповича. – М.: Колос, 1975.

Апальков И.С., Смирнов А.С. Экономика, организация и планирование сельскохозяйственного производства. : Учебник для с/х техникумов. – М.: Колос, 1969.

Адбильдина Л.И., Бельгибаев К.М. Экономика сельского хозяйства. – Алматы: Кайнар, 1996, - 608 с.

APPENDIX 

THE COUNCIL OF MINISTERS OF USSR DECREE 754

March 10, 1948 Moskow, Kreml

“On measures for transmigration of collective farmers and other Azerbaijani population from the Armenian SSR into Kura-Araks lowland in Azerbaijani SSR”

In addition to the Decree of the Council of Ministers of december 23, 1947 4083 “ On transmigration collective farmers and the other Azerbaijanis from the Armenian SSR to Kura-Araks lowland of Azerbaijani SSR “, the USSR s Council of Ministers Decrees.

To permit the collective farms fully transmigrating into Kura-Araks lowland from Armenian SSR to convey all production facilities what they have ( agricultural machines, household equipment, the livestock of any kind of cattle and poultry, transport means and property, natural and other funds ) excepting subsidiary enterprises ( mills, electric power stations ) and other production and cultural constructions.

To determine that the collective farms of Armenian SSR from which the collective farmers are transmigrating into Kura-Araks lowland of Azerbaijani SSR deliver the collective farms where the transmigrating collective farmers being a part of a personal property (agricultural machines, household equipment, the livestock of any kind of cattle and property, natural and other funds). The value of their personal property ( perennial plantations, mills, electric power stations and other household and domestic constructions) is delivering to the collective farms in the places of the installations by the day fixed by the Azerbaijani SSR s Council of Ministers and the Council of Ministers of Armenian SSR.

To oblige the Azerbaijani SSR s Council of Ministers and the Council of Ministers of Armenian SSR to determine the sequence of settling with the collective farms, collective farmers and other Azerbaijani population transmigrating into Kura-Araks lowland of Azerbaijani SSR for the immovable property abandoned by them in Armenian SSR in a month.

To oblige the Armenian SSR s Council of Ministers and the Council of Ministers of Armenian SSR to help the collective farmers-migrants, workers to sell the homes in the places of going out.

To reorganize as necessary the Department on economic structure of evacuated population and transmigration of kolkhoz economies in the Azerbaijanian SSR s Council of Ministers into the Emigrant administration of the Azerbaijanian SSR s Council of Ministers.

To make the Administration of mastering of irrigated lands in Kura-Araks lowland responsible for rending the technical assistance and helping in providing by the construction materials for emigrant kolkhozs and transmigrating collective farmers, but also the construction of subsidiary enterprises essential for the accomplishment of pointed migrants.

To permit the Council of Ministers of Azerbaijani SSR and the USSR’s Ministry of agriculture to organize on the basis of “ AzerbaijaniEmigrantConstruction” ( Azperelenstroy )’s bureau the trust “ AzEmigCon “ with submission of it to the Administration of familiarization of irrigated lands in Kura-Araks lowland and also organize the construction-assembly bureaus attached to the pointed trust in following places: Salyani, Alibayramly,Sabirabad and Pushkino.

To permit the Azerbaijani SSR’s Council of Ministers:

a) To organize the representatives in Armenian SSR ( Irevan ) for a period of transmigration of collective farmers and other Azerbaijani population from Armenian SSR into Kura-Araks lowland of Azerbaijani SSR.

b) to expend 11 million rubles for the realization of spade-works in the connection of transmigration of Azerbaijani population from Armenian SSR into Kura-Araks lowland ( planning, the construction of subsidiary enterprises, the organization of timber industry, buying of materials, construction equipment and transport facilities ) in 1948 year at the expense of assignments provided for out-of-limit capital expenditures in republic for 1948 year.

c) to realize the organized set of 700 people out of countrymen of the republic for the wooding in Molotov oblast and for the woks carrying out by the Administration of mastering of irrigated lands in Kura-Araks lowland of Azerbaijani SSR.

To permit the Administration of mastering of irrigated lands in Kura-Araks lowland:

a) to realize the works for the construction of buildings and subsidiary enterprises, and also take measures for further development of emigrant structuring by estimate-financial payments adjusted with Agricultural Committee in 1948 year.

b) to increase the production power of timber industry in Molotov oblast.

To oblige the State Purchasing of USSR, the Minister of car and tractor industry, the Ministry of machinery construction and instrument-making industry, the Ministry of electrical industry, the Ministry of the industry of construcrion materials of USSR, the SSR’ s Ministry of meat and milk industry, the Ministry of chemical industry and the Ministry of food industry to supply with equipment and materials in quantities under the Enclosure to the Council of Ministers of Azerbaijani SSR for the Administration of mastering of irrigated lands in Kura-Araks lowland in 1948 year.

To oblige the Central Unit on coordination with the Azerbaijani SSR’ s Council of Ministers to acquire the construction materials and cars to Azerbaijani SSR for selling it to the kolkhozs and collective farmers transmigrating from Armenian SSR into Kura-Araks lowland of Azerbaijani SSR.

To oblige the Ministry of Communications to give sections of 600 meters each within of zone’ s estrangement for trans-shipment and rail posts with laying dead-end siding to the load grounds in 1948 year to the Administration of mastering of irrigated lands in Kura-Araks lowland of Azerbaijani SSR in the stations: Lenkoran, Salyani, Sarajalar, Saatly, Kyrmynzi-Kend, Daykend, Papanin, New-Osmanly, Mashburun, Udgary and Masally of Azerbaijani railway.

The realization of pointed works to is entrusted to the Administration of Mastering of irrigated lands in Kura-Araks lowland of Azerbaijani SSR.

To permit the USSR, s Ministry of Agriculture to give 50 horses casted from studs to the Council of Ministers of Azerbaijani SSR in 1948 year for selling them to the wooding organizations of Azerbaijani SSR.

To entrust to the State stuff committee attached to the Council of Ministers of USSR to consider and confirm in a month the regular schedules of organizing Emigrant administration attached to the Council of Ministers of Azerbaijani SSR, the trust “ AzEmigCon “ and its construction-assembly bureaus and also the representatives of the Council of Ministers of Azerbaijani SSR in Irevan.

The chairman of the Council of Ministers of USSR

Stalin

The Governer of the Council of Ministers of USSR

Chadayev