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The Cost of World War II to the Soviet People: Two Five-Year Plans?

Published online by Cambridge University Press:  11 May 2010

Edward Saraydar
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Extract

In a recent paper in this Journal, James Millar and Susan Linz seek “to determine the reasonableness of the Soviet claim that World War II cost the Soviet economy two Five-Year Plans.” They argue that Soviet direct estimates of non-human war cost (capital loss plus direct war outlays plus wartime loss of national income), made by a postwar Extraordinary Commission, imply a cost per employed member of the 1940 population of 7.4 years' earnings. Their own indirect approximation of war cost—based on a construct which incorporates estimates of prewar and wartime propensities to consume and invest, a 30 percent capital loss claimed by the Soviets, and an assumed capital-output ratio of 3—is 3.9 years' earnings. After hypothesizing various values for their parameters, they conclude that “[t]he popular Soviet claim that World War II cost ‘two Five-Year Plans’ is, therefore, above the upper limit [6.0 years' earnings] of the range of the total war cost estimates calculated using Soviet national income data.”2 The implication is that their results cast significant doubt on “the reasonableness” of Soviet claims of war cost. This paper will demonstrate that if the Soviet direct estimate of war cost is properly expressed in Sovietmeasured 1940 consumption years, Millar-Linz's perceived divergence between the Soviet direct and their indirect estimate of war cost disappears.

Type
Notes and Discussion
Information
The Journal of Economic History , Volume 40 , Issue 4 , December 1980 , pp. 842 - 844
Copyright
Copyright © The Economic History Association 1980

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References

1 “The Cost of World War II to the Soviet People: A Research Note,” this Journal, 38 (Dec. 1978), 959.Google Scholar

2 Ibid., p. 961.

3 See their equations (1) through (10), ibid. In equation (10), the denominator should read 346N rather than 346.

4 Curiously, in discussing the impact of changes in the values of their estimated parameters, Millar-Linz state that “ … halving the capital-output ratio or doubling investment's share in national income during the war years is approximately equivalent to a 10 percent decline in the share of consumption in national income during the same period” (“Cost of World War II,” p. 961, n. 10). Yet it is evident from my equation (1) above that decreasing the capital-output ratio by an will decrease war cost in consumption years by (pαa)/c*, while a decrease in either c or i by an amount β(c + i) will increase war cost by [βn (1 − p) (c + i)]/c*. Thus, the initial parameter values given by Millar-Linz require for an equivalent impact that the following relationship holds: αβ = 2.27. The negative impact from halving the capital-output ratio α = .5), then, would be matched by a 22 percent increase β = .22) in c + i to .89. It follows that contrary to Millar-Linz, halving the capital-output ratio is equivalent to either a 25 percent increase in the share of consumption in national income, or a 160 percent increase in investment's share in national income during the war years.

5 “Assume that total annual consumption outlays in 1940 may be approximated as the weighted average annual wage (346 rubles) times N, employment.” Ibid., p. 960.

6 Bergson, Abram, The Real National Income of Soviet Russia since 1928 (Cambridge, 1961), p. 443, Table K-2.Google Scholar

7 Lorimer, Frank, The Population of the Soviet Union: History and Prospects (Princeton, 1946), pp. 183, 226.Google Scholar

8 Bergson, Abram and Heymann, Hans Jr., Soviet National Income and Product, 1940–1948 (New York, 1954), p. 111.Google Scholar

9 Ibid., p. 20, Table 3

10 See, for example, Bergson's discussion of these differences (Bergson, Real National Income, pp. 178–94). In regard to the size of consumption in 1940, Western-Soviet disparity may perhaps be reflected to some extent in the perceived divergence of national income growth from 1928. The Soviet official measure of national income (in 1926–27 rubles) by 1940 was over five times its 1928 level; over the same period, Bergson's 1940 estimate of national income (in 1937 rubles) was less than twice his 1928 estimate (ibid., p. 180, Table 43).

11 “Cost of World War II,” p. 959.