Thus spoke Stalin!
No sooner had Stalin’s order reached them than Valerian Sobol, head of the National Economic Balance (Balanse Narodnogo Hozyaistva, BNH) division of the Soviet Union’s Central Statistical Agency, and his team set to work calculating the purchasing power parity (PPP) between the new rouble and the US dollar. Yet this feverish endeavour was wholly unscientific; for what they actually did was subject the data to every conceivable form of torture in order to satisfy Stalin’s desire for a “high-value rouble”.
In his book Inside Perestroika, Abel Aganbegyan, one of Gorbachev’s chief economic advisers in the late 1980s, describes this process, which was to end with a surprise finale, brought about by a single stroke of the pen:
March 1950 saw the return to pre-war levels of production in our country, and the question of increasing the purchasing power of the rouble and strengthening its role was raised. Stalin ordered that the exchange rate be calculated. This was carried out in the Central Statistical Agency under Valierian Sobol, the head of the balance section of the Soviet economy. He carried out comparisons between the purchasing power of the rouble and the dollar when applied to consumer goods. Stalin wanted the rouble to be valued high, and those making the calculations knew this. They therefore used types of consumer goods and standards of comparison which were particularly favourable for us in their attempt to overvalue the rouble. This was the process they adopted: they would note various items, usually chosen because they were particularly favourable for us, then they would add another 15 per cent for the supposed better quality and greater longevity of our products. They would compare, for instance, the length of time American shoes and our hobnailed boots lasted and would then add a correcting factor because our boots lasted longer than American shoes. Stalin had given them one week for the whole of this task. Towards the end of that week, everyone who had any part in the exercise was working literally night and day.
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| Two Directions – Two Rates (A 1937 Soviet poster featuring a quotation from the USSR Council of Ministers’ decision on the new exchange-rate policy. The yellow aeroplane, symbolising the rouble, is fast, modern, powerful and climbing, while the blue aeroplane, symbolising the US dollar, is outdated, troubled and in descent.) |
The head of the Central Statistical Agency, Vladimir Starkovsky, incidentally the only more or less important personality in the country who was a Komi [*], was a talented man and had even been elected a corresponding member of the Academy of Sciences, a position he very largely used for the falsification of material to please Stalin. He was in charge of our statistics for almost thirty-five years from 1939 onwards, and in this time, he managed to destroy most of the data and falsify the rest. (…) Starkovsky in those days spent all his time in Mikoyan’s office. Mikoyan was Stalin’s assistant at the Council of Ministers. At the last-minute Mikoyan went into Stalin’s office and waited for the results there. Sobol, who had been in charge of the calculations, was in Starkovsky’s office at the Central Statistical Agency, sitting by the government telephone. After a great deal of head-scratching to make the rouble worth as much as possible, it was decided that 1 rouble would be worth 14 dollars (…) At last the calculations were finished in the middle of the night and sent immediately to the Kremlin. Sobol and the others were greatly surprised when a little while later they read in the newspapers that the new exchange rate was 1 rouble for 4 dollars. This rate was established in March 1950. When they asked Starkovsky what it meant, he rather unwillingly told them that Stalin had looked at their calculations, frowned, picked up a blue pencil (apparently he very rarely used a pen, preferring pencils of different colours) and crossed out their figure, substituting “4”.
[*] The Komi are a people living in the Komi Republic in northern Russia and belong to the Finno-Ugric language family.
Source: Abel Aganbegyan, Inside Perestroika - The Future of the Soviet Economy, translated from Russian into English by Helen Szamuely, Harper & Row, New York, 1990, pp. 211–212.
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