08

Feature

On the eve of Victory Day, 9 May, Vitaly Shlykov, an acknowledged expert on the Russian defense industry, spoke about the lessons of the Second World War.

ALEXEI PANKIN EXPERT MAGAZINE

Did Hitler have a chance of win- ning the war?

No. Commanders win on the fi eld of battle, but it’s the econ- omy that wins wars. The Soviet Union gained victory over Hit- ler’s Germany, above all, be- cause of the superiority of its system for preparing the econ- omy for war. As a result of its industrialisa- tion policy, as early as 1937, the USSR produced about 3,000 tanks, i.e. more than all the other countries of the world put to- gether. This was known to Hit- ler. But he was unaware of the main thing: in 1937, the USSR already had the capacity to pro- duce 70,000 tanks and tens of thousands of planes per year. Hitler himself later admitted that if he had intelligence on the mobilization capacity of the So- viet economy, he would never have attacked the USSR.

And what were the secrets of the Soviet economy?

The Soviet Union was a state that from the very beginning of its existence had been prepar- ing for the inevitability of mili- tary confrontation with the rest of the world. Before the second half of the 1930s, there were no specialised military industries in the USSR. In peacetime, only a small pro- portion of the industrial capac- ity was used for military pro- duction, but in the event of war, it could all be rapidly switched to defence needs. It was only on the eve of war that specialised industries began to be marked out – the basis of the future mil- itary-industrial complex. The other “secret” was the planned economy. In 1943, the USSR was smelting only 8.5 mn tonnes of steel, compared to the 35 mn tonnes produced by Ger-

RUSSIA INDIA BUSINESS REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

THE ECONOMIC TIMES WEDNESDAY_MAY 12_2010

BOOKMARKS

english.pobediteli.ru WWII in Russia eng.9may.ru Victory day. A RIA Novosti project on the history of the Great Patriotic war. en.paradpobedy.ru Victory parade mulimedia website

Interview A renowned military expert, economist and historian on the peculiarities of the war economy

The curse of mobilisation

WWII veterans during the Victory Day celebrations.

many and its satellite countries, but we produced four times as many tanks as the Germans.

Let’s return for a moment to 1945, the year of victory…

At the end of the war, Stalin, who was sure that new wars with world imperialism were ap- proaching and was convinced of the effectiveness of the mobilisa- tion model which had brought victory in the Great Patriotic War, continued to develop it. Subsequently, as nuclear weap- ons, ballistic missiles, nuclear- powered submarines and other arms appeared, which could no longer be produced by civilian factories, the Soviet model was supplemented by one geared to- wards the mobilisation-related production of arms already in service with the armed forces. Enormous reserve capacity for production of both these high- technology and highly special- ised arms began to be created. Incidentally, the Americans started off on the same path, be-

ginning with the war in Korea (1950–1953), but turned off it in time. In the mid-1960s, they gave up maintaining their mo- bilisation capacity, not just be- cause it was meaningless in the context of nuclear war, but also, and mainly, because its expense was undermining their com- petitiveness in world markets in relation to Japan and Ger- many. That’s why it was we who were defeated in the Cold War, and not them.

So you agree with those who believe that the USSR could not cope with the burden of its mili- tary expenditure?

Of course. If you produce 3,000 tanks but want to have the ca- pability to rapidly scale up pro- duction to 70,000, you have to hold the appropriate industrial capacity and reserves: you must be able to extract the oil and coal and smelt the steel you need to produce and fuel 70,000 machines instead of 3,000. This was the Soviet model after the

War. The capital investment in the so-called primary indus- tries, i.e. in power engineering, steel, aluminium and titanium smelting and so on, was many times higher than that in pure- ly military production. Thus, the surpluses in raw material and other materials were also military expenditure. And all the so-called civilian machine- building and consumer goods production existed in capaci- ties intended for military pro- duction and worked on the raw materials, which in peacetime could not be required for pure- ly the defence industry. Thus, the real “black hole” in the So- viet economy was the exces- sively infl ated raw material and primary industries, which gave nothing either to the military or to the population. In the fi nal analysis, the Soviet economy collapsed not because of over- production of arms but because of the inconceivable overpro- duction of raw materials and intermediate materials.

“A little growth would go a long way to earning Russia little more love...”

To advertise in this

supplement

contact

Julia Golikova

golikova@rg.ru

ph. +7 (495) 755 3114

“It’s about the atmophere of an oasis of recreation with delicious drinks, snacks, comfortable seats, wi-fi...”

“My strategy has been to find the funnier side of life in Russia, and it works for me.”

Vitaly Shlykov is a former So- viet Army intelligence officer, historian and economist. Ac- cording to one expert poll, he is one of the ten most author- itative Russian military ex- perts and one of the 80 most influential people in the country. Presently, he is a member of the Public Council of the Russian Defence Ministry.

Fine. I think we can see how the mobilisation economy at first saved the country in 1941–1945 and then ruined it in 1991. As far as I can see, for you, the concepts of “radical economic reform” and “defence conversion”, i.e. demilitarisation, are essentially synonymous?

When the war started in 1939, America had 9.5 mn unem- ployed and its army had 170,000 people and 200 tanks. During the war, 12 mn people were called up to the armed forces. Military production grew to a vast level (the Americans pro- duced 300,000 warplanes, 100,000 tanks and 124,000 warships) and with a shortage of manpower, it drew in women, who traditionally had not worked in America before then. At the same time, military re- quirements led to the emer- gence of a completely new, high-tech industry: radar, elec- tronic valves, computers, peni- cillin, etc. The production facil- ity for the atomic bomb was the

world’s first fully automated factory and so on. The USA spent 45 pc of its GDP on mili- tary efforts and did not under- mine its economy at all. So then, within two years, after victory, the Americans had practically ceased military pro- duction and sent their army home. There was neither unem- ployment nor a slump in pro- duction: just a small burst of in- flation in 1948 and that was soon damped down. The econ- omy began to grow rapidly, be- cause all the resources and all the technologies that had accu- mulated in the military sector began to work on the domestic market. This occurred because during the war, an enormous level of deferred consumer demand had developed. During the war, the USA had a rationing sys- tem; the production of cars and many types of domestic equip- ment was banned and housing construction was severely re- stricted. But people were still earning money the same way and putting it in the bank. They were the ones who fi nanced the economic upsurge, which in the twenty years after the war turned the USA into a super- power.

Which was exactly the Soviet sit- uation at the end of the 1980s and the beginning of the 1990s…

Yes, the public’s savings at that point were worth many trillions of today’s roubles. I suggested meeting this deferred demand by using the power of the mili- tary industrial complex. After all, our economy was built on the same pattern as the Ameri- can economy of the 1940s. It had enormous reserves of cheap raw materials and huge excess capacity. Of course, in terms of its structure and technology, it did not have the characteristics of a market economy. However, by then, it already had the basic components from which a mod- ern economy is built: a sus- tained high level of education, advanced applied and theoret- ical science, powerful transport and energy systems and a major technical and technological ca- pacity, concentrated in the mil- itary sector. Thus in many re- spects our real socialism (in effect, state capitalism) had been a system parallel to west- ern capitalism and is growing closer to it.

Catch the vibes of Moscow

in.rbth.ru/blogs

This issue has been conceptualised by

INTERNATIONAL MEDIA MARKETING, RESPONSE adqueries@ timesgroup.com

• Feature Co-ordinator:

Mehernosh Gotla

(mehernosh.gotla@ timesgroup.com)

RUSLAN SCHAMUKOV_ITAR-TASS

OLEG LASTOCHKIN_RIA NOVOSTI Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8