Five-Year Plan
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Five-Year Plans or Piatiletkas (пятилетка) were a series of nation-wide centralized exercises in rapid economic development in the Soviet Union. the plans were created by the Gosplan based on the general guidelines of the Communist Party for economical development. Fulfilling the plan became the watchword of Soviet bureaucracy. (See Overview of the Soviet economic planning process)
Other developing countries have emulated the concept of central planning, setting integrated goals for a finite period of time: thus we may find "Seven-year Plans" and "Twelve-Year Plans".
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Soviet Union
Several five-year plans did not take up the full period of time assigned to them (some were successfully completed earlier than expected, while others failed and were abandoned). The initial five-year plans were created to serve in the rapid industrialization of the Soviet Union, and thus placed a major focus on heavy industry. Altogether, there were 13 five-year plans. The first one was accepted in 1928, for the five year period from 1929 to 1933, and completed one year early. The last, thirteenth Five-Year Plan was for the period from 1991 to 1995 and was not completed, as the Soviet Union was dissolved in 1991.
Background
Stalin inherited from Lenin, and retained the "controlled capitalism" of the New Economic Policy, the NEP. In 1921, Lenin had won the 10th Party Congress to the NEP, a temporary retreat from the socialist War Communism that had been set up during the Russian Civil War. In War Communism, the state had assumed control of all the means of production, exchange (trade) and communication. All land had been declared nationalized (by the Decree on Land, finalized in the 1922 Land Code) which also set collectivization as the long-term goal), although the peasants had been allowed to work the land they held, with the production surplus to their needs being bought by the state on the state's terms (not surprisingly, the peasants cut production, whereupon food was "requisitioned", i.e., seized); money gradually came to be replaced by barter and a system of coupons.
Under the NEP, the State controlled all large enterprises (factories, mines, railways), but small private enterprises, employing fewer than 20 people were allowed (mostly tradesmen and shopkeepers); the appropriation of farm produce was replaced by a tax system (a fixed proportion of the crop), and the peasants were free to sell their surplus (at a state-regulated price), although they were encouraged to join state farms (Sovkhozes, set up on land expropriated from nobles after the 1917 revolution), in which they worked for a fixed wage like workers in a factory; money came back into use, with a new bank note being issued, backed by gold.
The NEP had been Lenin's response to a crisis. In 1920, industrial production had been 13% and agricultural production 20% of the 1913 figures. Between 21st February and 17th March 1921, the sailors in Kronstadt had mutinied. In addition, the Russian Civil War, which had been the main reason for the introduction of War Communism, had virtually been won and so controls could be relaxed.
In the 1920s, there had been great debate between Bukharin, Tomsky, and Rykov on the one hand, and Trotsky, Zinoviev and Kamenev on the other. The former group considered that the NEP provided sufficient state control of the economy and sufficiently rapid development, while the latter argued in favour of more rapid development and greater state control, taking the view, among other things, that profits should be shared among all people, and not just among a privileged few. In 1925, at the 14th Party Congress, Stalin, as he usually did in the early days, stayed in the background but sided with the Bukharin group. However, later, in 1927, he changed sides, supporting those in favour of a new course, with greater state control.
The Plans
Each plan dealt with all aspects of development: capital goods (those used to produce other goods, like coal, iron, and machinery), consumer goods (e.g. chairs, carpets, and irons), agriculture, transportation and communications, health, education, and welfare. However, the emphasis varied from plan to plan, although generally the emphasis was on power (electricity), capital goods, and agriculture. There were base and optimum targets. Efforts were made, especially in the Third Plan, to move industry eastward to make it safer from attack.
The Fourth and Fifth Plans, 1946-1950 and 1951-1955
The emphasis was on reconstruction, although Stalin in 1945 promised that the USSR would be the leading industrial power by 1960.
Much of the USSR at this stage had been devastated by the war. Officially, 98,000 collective farms had been ransacked and ruined, with the loss of 137,000 tractors, 49,000 combine harvesters, 7 million horses, 17 million cattle, 20 million pigs, 27 million sheep; 25% of all capital equiment had been destroyed in 35,000 plants and factories; 6 million buildings, including 40,000 hospitals, in 70,000 villages and 4,710 towns (40% urban housing) were destroyed, leaving 25 million homeless; about 40% railway track had been destroyed; officially 7.5 million servicemen died, plus 6 million civilians, but perhaps 20 million in all died (cf. 250,000 from the US). In 1945, mining and metallurgy were at 40% of the 1940 levels, electric power was down to 52%, pig-iron 26% and steel 45%; food production was 60% of the 1940 level. After Poland, the USSR had been the hardest hit by the war. Reconstruction was impeded by the chronic labour shortage. Moreover, 1946 was the driest year since 1891, and the harvest was poor.
The US and USSR were unable to agree on the terms of a US loan to aid reconstruction, and this was one of the causes of the Cold War. However, the USSR did gain reparations from Germany, and Eastern European countries made payments in return for the Soviets liberating them from the Nazis. in 1949 COMECON (Council for Mutual Economic Aid) was set up, linking the Eastern bloc countries economically. One-third of the Fourth Plan's capital expenditure was spent on Ukraine, which was important agriculturally and industrially, and which had been one of the areas most devastated by the war.
In 1947, food rationing was ended, but agricultural production was barely above the 1940 level by 1952. However, industrial production in 1952 was nearly double the 1940 level.
Other countries
The People's Republic of China has also used Five-Year Plans, and still nominally does so, though their relevance to the rapidly-developing parts of China where Socialism with Chinese characteristics (to all intents and purposes, market capitalism) has taken off are doubtful.
Jawaharlal Nehru, impressed with the Soviet Union's industrial progress, implemented similar principles in India. India has an extensive network setup to formulate 5-year plans under the supervision of the Planning Commission. India is currently in its 10th 5-year plan(2002-2007) or Panch-Varsh Pranalika.
Under Juan Domingo Perón, two Five-Year Plans were implemented in Argentina, being known there as 'planes quinquenales'.
France, under dirigiste policies, had indicative 5-year plans, while it had a predominantly capitalist economy.