Business: Race with Russia

How does U.S. economic growth compare with that of the Soviet Union? Last week the National Bureau of Economic Research gave a qualified answer in its annual report: on a percentage basis, industrial output in Russia has risen more rapidly than in the U.S. since 1928, but only about one-fourth as rapidly as the Russians claim. Russia’s growth statistics are peppered with gaps, probably omit some stagnant or declining industries, use highly doubtful totals. Most of Russia’s gain has been the result of massive diversion of manpower to industry, a regimented movement roughly similar to the voluntary exodus to the cities that took place in the U.S. in the late 19th century. In short, Russia started its industrialization much later and on a much lower base, is naturally growing faster than the more mature U.S. economy.

But in one key economic area—the level of industrial output per man-hour —Russia is still far behind the U.S. U.S. national product per man-hour has been rising even faster than national product per capita (which is by far the highest of any nation), has’jumped at a rate of 35% to 40% a decade since World War II—and is still growing by the day. The reasons for the growth, says the report, are not only an increase in the volume of capital goods (of which the U.S. has more than any other nation), but the U.S.’s large and growing investment in education, science and technology. Russia’s rapid industrial growth is a factor that must be reckoned with, concludes the report, but so must two other facts: Soviet labor drained into industry leaves other sectors of Russia’s economy weakened and. since Russian manpower has its limits, “has even more important implications for the future rate of Russia’s industrial growth.”