On April 23, 1929, the XVI Conference of the All-Russia Bolshevik Party adopted the first five-year plan. Designed to upgrade the Soviet economy in the shortest time possible, it emphasized heavy industry at the expense of consumer goods and the agricultural sector.
It covered the period from 1928 to 1933, but was completed ahead of time in 1932, marking the first step in the process of socialist industrialization – a series of nation-wide centralized exercises in rapid economic development in the Soviet Union – and the official introduction to the planned economy in the Soviet Union for the next six decades.
The planned economy suggested introduction of the administrative command methods of managing the country’s economy, and eliminating the private sector, with all the property concentrated in the hands of the Bolshevik Party.
Joseph Stalin’s plan was to erase all traces of the capitalism brought about by the New Economic Policy – a set of pro-capitalist anti-crisis measures adopted by Vladimir Lenin in the early 1920s to mend the Soviet economy devastated by World War I and the Civil War – and to transform the Soviet Union as quickly as possible, into an industrialized and completely socialist state, with an economy modernized to the level of the developed Western states. The other reason for industrialization was the constant threat from the hostile “non-socialist” states, and the anticipation of war.
Stalin's first five-year plan, adopted by the party in 1929, envisioned a 250 percent increase in overall industrial development, and a 330 percent expansion in heavy industry alone. Many new industrial centers were developed, particularly in the Ural Mountains, and thousands of new plants were built across the country. Coal and iron production both quadrupled their output, electric power production increased, and 1500 new industrial plants were built. But the unrealistic production targets set by Stalin gave way to serious problems. The investments into heavy industry were so drastic, that it led to increasing consumer prices and deficits.
The industrialization relied largely on agriculture, using it as a major financing resource by speculating on grain prices and imposing high taxes. It led to the impoverishment of the peasants, famine, and in the long-run, the total degradation of the entire agricultural sector.
Such mass production required a huge work force, a problem addressed by means of extensive propaganda. There was no shortage in the cheap labor force, as the Komsomol movement responded very enthusiastically to the appeal of the party. Also, after collectivization, starvation and poverty had driven many peasants to the city. Millions of people built plants, power stations, railroads, and metro lines on so-called “bare enthusiasm," which, as records prove, wasn’t an exxageration. Later, in 1935, the Stakhanov movement of “peredoviks” (leaders) of production” was formed, deriving its name from Stakhanov, the coal-miner, who set the record by producing 14.5 daily norms of coal over a one night shift, according to the official legend.
However, later in the years of the industrialization, as enthusiasm faded away, the working conditions toughened significantly, with the introduction of criminal liability for damages to equipment, and even the death penalty for stealing state property.
In the late 1980s, the industrialization, and the whole planned economy idea was subjected to close analyses, to reveal its impact on the country’s economy, and its true value. Many of the projects proved unrealistic, and remained on paper forever, not to mention the mass devastation the industrialization caused to the agriculture and consumer goods sector, requiring years for them to recover.
The five year plans ended on number thirteen which was to be completed in 1995, but never was, due to the dissolution of the Soviet Union in 1991.