Rates of Expenditure of Material Resources, Formulation of

Rates of Expenditure of Material Resources, Formulation of


in socialist countries, the establishment of planned limits for the material expenditures required to produce one unit of output or a specified volume of work. Rates for material expenditures affect the amount of raw and processed materials, fuel, and other factors of production consumed in the course of production.

Rates have definite influence on the planned proportions for distributing social labor among sectors of the national economy; such rates serve as the basis for planning linkages within and between sectors. Rates are used to plan material outlays in all sectors of the national economy and to calculate resource requirements. Rates serve as the technical and economic basis for the development of material balances; they are used in the distribution of raw and processed materials, fuel, and electrical energy as well as in the monitoring of their efficient use.

Reducing the consumption of materials in output is a major factor in intensifying production and raising its efficiency. As the scale of public production expands, as scientific and technological progress accelerates, and as labor productivity rises, a steady increase occurs in the proportion of the prime cost of output made up by material outlays. This follows from K. Marx’ proposition: “As the productive force of labor develops, the cost of the raw material forms an increasingly larger part of the value of the market product, and not only because it is wholly included in the latter but also because both parts, the part corresponding to machine wear and the part which is created by newly enlisted labor, decrease in each part of the total product” (K. Marx and F. Engels, Sock, 2nd ed., vol. 25, pt. 1, p. 121). Thus, in 1930 material outlays constituted about 31 percent of the prime cost of industrial output in the USSR, while in 1972 they equaled more than 75 percent. A decrease of just 1 percent in the consumption of materials in nationwide output would equal an additional 4 billion rubles of growth in national income.

Expenditure rates should be scientifically substantiated, progressive, and dynamic. They should be systematically revised to conform to organizational and technical changes in production. The development of scientifically substantiated rates requires a system of precise classification. Based on the significance of the materials to be controlled within the production process rates are specified for outlays of raw materials, basic processed materials, various auxiliary processed materials, and fuel and energy resources.

By degree of consolidation, expenditure rates are divided into individual, group, and consolidated average sectorial rates. Individual rates are those established for the production of one unit of a particular type of output under the organizational and technical conditions of production that prevail in a specified enterprise, shop, or section. Group rates are those established for the production of the same kind of output at a number of similar enterprises. Consolidated average sectorial rates are those determined for the production of similar output for an entire sector, and consist of average weighted rates based on progressive individual and group rates.

Long-range, annual, and current expenditure rates for material resources are also differentiated. Long-range rates provide the basis for future plans, including five-year plans, and thus must be calculated for a suitably long period. Annual rates are used to determine requirements and allocations of material resources for a single year and express the average annual expenditure of material resources needed to produce a given unit of output or work. Current rates reflect the organizational and technical conditions of production prevailing at any given moment in a single enterprise and are used to organize the supply of materials to shops and work places and to monitor these materials’ efficient use.

In practice, three basic methods are adopted to establish rates of expenditure of material resources: the analytic-calculation method, the production testing method, and the statistical-report method. The analytic-calculation method is the most progressive and scientifically the soundest. It is based on rigorous technical and economic calculations regarding the magnitude of material expenditures, combined with an analysis of production conditions and reserves intended to economize on material resources. The production testing method is used when it is technically impossible to calculate rates directly with the required precision; rates are then introduced on the basis of experimental testing for the magnitude of material expenditures, conducted either under production conditions or in the laboratory. The statistical-report method is the least substantiated; here rates are established for the next planning period on the basis of statistics and reported data drawn from actual consumption of materials for the past period.

The technique of calculating rates differs specifically for various sectors of industry and for various materials. In all cases, however, the directly useful, or pure, expenditure of materials, along with production wastes and other losses, must be determined in the course of formulating rates.

Rates developed directly at the enterprise are adopted for the entire sector by industrial associations, ministries, and departments, which also monitor their observance. Gosplan (the State Planning Committee of the USSR) exercises general leadership over the formulation of rates of material expenditure in the USSR. Automated systems for the gathering and updating of standards are being developed and introduced under the direction of Gosplan.

The establishment of rates of material expenditure is given prime importance in every socialist country. In Bulgaria, the German Democratic Republic, and Rumania, work dealing with rates is directed by material and technical supply agencies, while in Poland and Czechoslovakia it is managed by central planning bodies. Control over the use of material resources is generally

exercised by central supply agencies jointly with the sectorial ministries.