The Soviet Economic Reform of 1965

Abstract

In 1964 the Soviets started to experiment with new methods of management, first of all in two garment enterprises and later in several hundred enterprises, almost all of which were in light industry. Experimenting enterprises were assigned only a few targets — in many only sales and profit — and some had to determine their output mix in line with orders received from buyers (Felker, 1966, pp. 82–93). It was no accident that the experiments were applied in light industry. There, planning is the most difficult, since, in order to achieve and maintain market equilibrium it is necessary to react promptly to incessantly changing demand. The failing of the planning system in light industry was reflected in shortages at a time when huge unsalable inventories existed (Katz, 1974, p. 106).