Balance Method in Planning

Balance Method in Planning


the method used in socialist countries in drawing up national economic plans, plans for development of individual branches and industries, and territorial economic plans (republic, krai, and oblast plans and plans of economic regions). With the aid of the balance method, needs and resources are coordinated, expenditures and results are compared, all targets and indexes of the plan are brought to agreement and are coordinated, and the unity and balance of all parts and sections of the plan are ensured. The balance method serves as an important tool for bringing out economic reserves; for establishing material, cost, and labor proportions in the plan that are consistent with the goals and tasks of the plan and that guarantee the optimum and balanced development of the economy; and for ensuring compliance with these proportions during the plan’s implementation. The balance method is thereby used to prevent and to overcome individual disproportions in the economy.

Material balances were already being employed at the time that the preconditions for planned management of the economy on the scale of the whole Soviet republic were being created (1918–20), in relation to the elaboration of the first industrial programs and of the plans for agricultural product procurements, transport of shipments, and distribution of produce for the army, the urban population and other consumers. The balance method was used on a wide scale in the elaboration of the first long-range plan—the State Plan for the Electrification of Russia (GOELRO). V. I. Lenin, characterizing the GOELRO plan as a scientific plan, emphasized: “In sum, we have both a material and a financial (in gold rubles) balance of electrification” (Poln. sobr. soch., 5th ed., vol. 42, p. 341). The first experiment in history in drawing up a consolidated balance was the 1923–24 summary balance of the national economy compiled by the Central Statistical Administration. In subsequent years the balance method was continually improved and became the leading method of drawing up long-range and current plans.

The objective necessity of using the balance method was brought about by the operation and requirements of the economic laws of socialism. The planned development of socialist production to satisfy constantly growing social needs and the ensuring of constant proportionality in the development of the national economy and its individual spheres and branches require the use of a system of balances that includes material (physical-unit) balances, cost (monetary) balances, labor balances, balances of intersector relations, and a balance of the whole national economy.

With the aid of material balances (physical-unit balances of individual products and balances of productive capacities), material proportions are established within each branch and between individual associated branches and industries in the USSR as a whole and in a territorial context; the production and consumption of specific types of output are coordinated; intersector ties are improved; problems of the rational location of production are solved; and correspondence in the development of capacities in associated industries is assured. Cost balances make it possible to coordinate production, distribution, and utilization of revenue, specifically the revenue and expenditures of the state (the financial balance and state budget of the USSR and the Union republics), the revenue and expenditures of economic organizations, the cash income and expenses of the population, and others. With the aid of labor balances (a summary balance of labor resources, balances of skilled cadres, a balance of specialists, a balance of labor in kolkhozes, and others), a planned distribution and redistribution of manpower resources is carried out among the spheres of activity, branches of the economy, and regions of the country; the scale of training of skilled cadres is determined; and the necessary numbers and measures are derived for recruiting into social production able-bodied persons who are engaged in domestic work or work on private plots of land.

The system of balances serves also as a means of coordinating and tallying the material and cost proportions of the economy for balanced economic development. With the aid of balances, the growth of the income of the population is balanced with the growth of consumer-goods production, the volume of goods turnover, and the planned amount of various kinds of paid services provided to the public by state and cooperative organizations; the planned volume of capital investments is coordinated with the means for their material provision (building materials, equipment, and so on) and with the appropriations for their financing (from the state budget, bank credits, funds for the development of the enterprise, and others).

At all stages of the elaboration and fulfillment of the plan, the use of a system of material, cost, and labor balances makes it possible to determine plan targets for individual branches, industries and sectors of the national economy and to coordinate and tally these targets. However, the achievement of complete balance in the development of the national economy as a whole requires the establishment and observance not only of territorial proportions and proportions within and between branches but also of the most important general-economic proportions—that is, the basic structural relationships in the economy and above all the relationships in the branch-by-branch structure of the social product and national income, relationships between accumulation and consumption in the national income, and relationships between the productive and nonproductive spheres of the national economy. The most important general-economic proportions also include the relationships between the production of the means of production and the production of consumer goods and between industry and agriculture, including the branch-by-branch structure of industry and agriculture, as well as proportions in the distribution of resources allocated for current needs, for reserves, and for capital works.

General-economic proportions in the national-economic plan that assure the rate of economic development and the level of public consumption envisaged by the plan and the resources necessary for expanded reproduction are established with the aid of summarizing balances that are part of the balance of the national economy of the USSR. The balance of the production, consumption, and accumulation of the social product characterizes the material aspect of social production and its utilization for remuneration, consumption, accumulation, and export. The balance of the social product is actualized in the intersector balance of the production, distribution, and consumption of output of the national economy. The intersector balance makes it possible to coordinate the planning of the national economy as a whole with the planning of sectors and to tie physical and cost indexes together into a single model of the national economy, as well as giving the opportunity to produce alternative balance calculations with the use of up-to-date computer technology.

The balance of the production, distribution, redistribution, and utilization of national income reflects the formation of the primary revenue of state enterprises, kolkhozes, and employees of the sphere of material production, the redistribution of this revenue, and the formation of final income and its utilization for consumption and accumulation. The summary balance of labor resources reflects the availability and composition of manpower resources and their distribution among branches and types of employment. The balance of fixed capital stock characterizes the availability, growth, and removal of fixed capital assets, their depreciation and wear.

The balance method and the system of balance calculations are used with a varying degree of detail at all stages of planning: at the stage of developing the basic directions (or control figures) of the plan, in drawing up the detailed plan, and in checking its fulfillment.