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Related to Economic Policy: fiscal policy, social policy
the system of economic measures implemented by the state in the interests of the dominant class in pre-socialist formations or, under socialism, in the interests of all society; a branch of economic science.
The social content and objectives of economic policy and the means chosen to achieve its goals are determined by the character of the social system and ownership of the means of production. Like all policies, economic policies are the concentrated expression of economics, or of historically determined modes of production. The economic policy of the political party in power is influenced by numerous factors, such as the relationship between class forces, the stage of development of the class struggle in a given country and in the international arena, and the state of peace or war.
Economic policy dates back to the inception of classes and the formation of the state. In a society with antagonistic classes, it reflects the interests of the exploiting classes and is the means by which such interests are protected and realized. Under slavery and feudalism, economic policy was generally confined to the imposition of taxes and the regulation of monetary circulation. In the formative period of the capitalist mode of production, the bourgeois state took measures to establish and develop manufacturing enterprises and adopted laws that consolidated the supremacy of capital over hired labor; mercantilism and protectionism became widespread.
The growth of the industrial bourgeoisie gave rise to the policies of free enterprise and free trade. The economic policy of the bourgeois state during this period reflected the historical conditions of free-competition capitalism. In the age of imperialism, the bourgeois state has increasingly intervened in the process of capitalist reproduction. State monopoly regulation is a complex mechanism of socioeconomic and political maneuvering that is used to preserve the capitalist economy. It includes such measures as economic programming, development of the state sector, subsidies, anti-inflationary measures, and credit and financial activities directed toward foreign economic expansion (for example, tax advantages for export monopolies, government-guaranteed exports, and customs policies).
To a considerable degree, the capitalist countries’ monopolies use the machinery of the state for their international operations. The period that followed World War II saw the emergence and growing range of activities of international monopoly organizations—some encompassing a particular branch in its entirety, such as the European Coal and Steel Community, and some designed for a more general type of economic integration, such as the European Economic Community.
In the age of imperialism, the economic policies of the bourgeois states and parties reflect capitalism’s adaptation to new historical conditions. Such policies, however, cannot ensure the planned development of the economy on the scale of the entire society or the stabilization of capitalism as a system. The general crisis of capitalism continues to mount. The economic policy of the bourgeois states as a whole, being diametrically opposed to the fundamental interests of the working people, leads to even sharper class contradictions.
In the developing countries that pursue an independent course, economic policy is aimed at limiting the omnipotence of the foreign monopolies, establishing a state sector in the economy, developing industrial production, and implementing agricultural reforms. These countries favor the establishment of a new international economic order with just and equitable international division of labor and foreign economic exchange.
Economic policy plays a fundamentally different role under socialism—a system that is based on the public ownership of the means of production and that develops according to plan through the conscious use of economic laws. Through its economic policies, the socialist state regulates material production—the basis of society’s development—and in so doing determines the future prospects and tempo of social progress, directly influences changes in the social structure and the people’s greater well-being, and ensures the solution of the basic socioeconomic problems of communist construction. Through their successful efforts to build communism, the socialist countries exert a decisive influence on world development.
Fundamental economic policy, economic strategy, and current economic targets are determined by the communist and workers’ parties of the socialist countries—primarily at the party congresses and at the plenary sessions of the leading central party organs. The economic policy of the communist parties, which is based on Marxist-Leninist theory, expresses the fundamental interests of the toiling masses headed by the working class and of all strata and social groups in socialist society; it is distinguished by its scientific character, realism, goal-directedness, and consistency.
V. I. Lenin formulated the most important principles of the economic policy of the socialist state. The basic tenets of economic policy are concretized and implemented in the activity of the socialist state through the national economic system of management and planning. The state’s long-term, or five-year, and one-year plans reflect the conditions and specific characteristics of a given period of the country’s development. Under the specific conditions that evolved in the first few years after the victory of the Great October Socialist Revolution in Russia, the Communist Party and the Soviet state implemented the policy of “war communism” and the New Economic Policy. Industrialization, the collectivization of agriculture, and the cultural revolution created a mighty industry and overcame the country’s age-old backwardness, thus ensuring the victory of socialism.
Starting with the late 1930’s, the economic policy of the CPSU and of the Soviet state was aimed at strengthening victorious socialism, building an advanced socialist society, expanding and consolidating the material and technical basis for socialism, developing socialist production relations, and raising the living standard and cultural level of the working people. Until the mid-1950’s, the major portion of the country’s accumulation fund was used to accelerate the rate of development of heavy industry—an effort dictated by the need to restore the national economy, which had been destroyed during the Great Patriotic War of the Soviet Union of 1941–45, and to strengthen the economic and defensive power of the Soviet nation and of the entire world socialist system. After the mid-1950’s, the Soviet state was able to allocate a greater part of its resources to the development of light industry, housing construction, and agriculture. By the late 1950’s, the material and technical basis for socialism had been strengthened and the USSR was a mighty and invincible power. Socialism was finally and totally triumphant.
The building of an advanced socialist society in the USSR was contingent on the development of long-range economic policies and economic strategy under new conditions. With the general upsurge of the economy, it was found that the existing planning techniques and economic production incentives were not appropriate to the higher level reached by the productive forces and were indeed hindering the latter’s development. Therefore in the 1960’s and 1970’s the party and the state concentrated on basic improvements in production relations, in the management of the national economy, and in the planning and stimulation of production. These objectives were reflected in the documents of the March (1965) and July (1970) plenums of the Central Committee of the CPSU (CC CPSU) on the development of agricultural production; in the decree of the CC CPSU and Council of Ministers of the USSR (1966) introducing a guaranteed monthly wage for kolkhozniks; in the decisions of the September (1965) plenum of the CC CPSU on improved planning and stronger economic incentives for industrial production; and in the decree of the CC CPSU and the Council of Ministers of the USSR (1973) on the further improvement of industrial management.
An economic strategy corresponding to the conditions and tasks of advanced, or mature, socialism was devised by the Twenty-fourth and Twenty-fifth Congresses of the CPSU. “Like any other strategy, the party’s economic strategy begins with the formulation of tasks, with the articulation of fundamental, long-term goals. . . . Economic strategy also includes a precise determination of the ways and means to attain these goals” (Materialy XXV s”ezda KPSS, pp. 39, 40). The October (1976) plenum of the CC CPSU, which approved the tenth five-year plan, defined the key issues of economic development and devised a set of effective tactics for the solution of economic and political problems.
The supreme goal of the economic policy of the socialist state and of the party is the steady rise of the living standard and cultural level of the population. The system of advanced socialism offers greater opportunities to realize this goal, making it possible to more fully satisfy the people’s growing material and non-material needs, to improve the socioeconomic and production conditions of labor, to raise the level of the socialist mode of life, to perfect the structure of Soviet society, and to reduce the differences in affluence, cultural level, and working and living conditions of the different social groups in the cities and rural areas. The long-range goals of economic policy are set forth in concrete terms in the social program of the five-year plans (for example, the program for social development and for raising the people’s standard of living in the tenth five-year plan, established by the Twenty-fifth Congress of the CPSU).
The principal means employed to achieve the stated goals are (1) increasing the effectiveness of social production through its intensification, (2) accelerating the rate of scientific and technological progress, (3) raising labor productivity and improving the quality of all types of work throughout the national economy, and (4) coupling the attainments of the scientific and technological revolution with the advantages of socialism. The policy of increasing the effectiveness of social production is occasioned both by the long-term task of establishing the material and technical basis for communism and achieving victory in the economic competition with the capitalist system and by the specific conditions of the national economy at the present stage of development—in particular, by the limited possibility of expanding production at the expense of nonintensive factors.
The party’s economic strategy determines the basic directions in the development and improvement of production at any given stage. Thus the tenth five-year plan (1976--80) posed the task of promoting further growth in the country’s economic capacity, expanding and radically renewing the social funds, and securing the stable and balanced growth of heavy industry, which is the economy’s foundation. These tasks can be successfully accomplished by implementing the uniform scientific and technological policy that is a basic component of the party’s and the socialist state’s economic policy.
Economic policy includes capital investment policy and the rational allocation of productive forces, income, prices, and wages, as well as agricultural policy, financial and credit policy, and demographic policy. The policy of rational utilization of natural resources and environmental protection is increasingly assuming a separate identity. Foreign economic policy is an important part of economic policy; it contributes to socialist economic integration, the strengthening of stable and mutually advantageous cooperation with the developing countries, and the expansion of economic, scientific, and technological relations with the industrially developed capitalist countries based on the consistent observance of the principles of peaceful coexistence.
The successful implementation of the economic policy devised by the Marxist-Leninist parties of member nations of the Council for Mutual Economic Assistance enabled the majority of these countries to complete the transition from capitalism to socialism and to build a socialist society. The economic policy of these countries is now aimed at securing the further growth of social production, increasing its effectiveness, and raising the people’s material and cultural standard of living. Current efforts are devoted to building the advanced socialist society.
Socialist economic policy is distinguished by its humanistic objectives and its genuinely popular character. The constantly expanding participation of the working people in the formulation and implementation of economic policy is an important ruling principle of socialist and communist construction. Such participation takes various forms—namely, the nationwide discussion of key documents pertaining to economic policy, the workers’ participation in the solution of problems related to production and in the work of various social organizations, and the wide-ranging extent of socialist competition.
Economic policy is taking shape as an increasingly important and independent scientific school that investigates the scientific foundations and principles of political direction of the economy and explores the practical implementation of economic policies at various stages of development of socialist society. Economic policy is based on Marxist-Leninist philosophy and political economy and on the theory of scientific communism; it also takes into account the achievements of allied sciences—for example, theories of planning and management, sociology, and law. In the course of formulation of economic strategy and tactics, recommendations are made for improved management of the national economy, and ways and means are determined to mobilize the working masses for resolution of the problems confronting society. Many of the questions that fall within the scope of economic policy as a branch of science are open to debate—for example, the question of defining the subject matter and distinctive methods of economic policy that differentiate it from allied scientific disciplines. In the USSR the program of the political and economic education system includes the study of the economic policy of the CPSU.
REFERENCESMarx, K. K kritike politicheskoi ekonomii: Predislovie. K. Marx and F. Engels, Soch., 2nd ed., vol. 13.
Lenin, V. I. “Ekonomika i politika v epokhu diktatury proletariata.” Poln. sobr, soch., 5th ed., vol. 39.
Lenin, V. I. “Eshche raz o profsoiuzakh, o tekushchem momente i ob oshibkakh tt. Trotskogo i Bukharina.” Ibid., vol. 42.
Materialy XXVs”ezda KPSS. Moscow, 1977.
Brezhnev, L. I. Ob osnovnykh voprosakh ekonomicheskoi politiki KPSS na sovremennom etape: Rechi i doklady, vols. 1–2. Moscow, 1975.
Abalkin, L. I. Politicheskaia ekonomiia i ekonomicheskaia politika. Moscow, 1970.
Burzhuaznye ekonomicheskie teorii i ekonomicheskaia politika imperialisticheskikh stran. Moscow, 1971.
Voprosy ekonomicheskoi politiki KPSS na sovremennom etape, 3rd ed. Moscow, 1974.
Kashin, V. N. “Ekonomicheskaia strategiia i politika KPSS v usloviiakh razvitogo sotsializma.” Planovoe khoziaistvo, 1976, no. 10.
L. I. ABALKIN