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Specifically:

  1. How were workers compensated, was wage equal everywhere? If not - what affected the variations?

  2. What were the limitations of possession of money and/or assets? How were they enforced?

  3. How would one create a new business or company? Could you own a company?

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    This should be split into three separate questions. Three questions in one is too broad. – Null Dec 7 '16 at 4:07
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    You also have to be specific about the time period: The situation from 1921-1928 was very different from the following (or preceding) period. – Moishe Kohan Dec 7 '16 at 4:19
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    And not just those 2-3 periods. Things changed again under Brezhnev, and again later. Basically you'd have the revolutionary period, the civil war period, the Leninist period, Stalin/Kruschev, pre-Gorbachev, and Gorbachev periods, each with quite different overall policies. – jwenting Dec 7 '16 at 11:59
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    And even during the period that @jwenting mentioned, things have changed dramatically. For example, collective farm workers were effectively serfs until 1974, prohibited from moving away from the land they were assigned to, and required to obtain a permit even for short term travel to a nearby city. And 1974 is about 1/2 way into Brezhnev's reign. – Michael Dec 7 '16 at 16:36
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    @jwenting under Stalin and under Khrushchev the rules were very different – Anixx Dec 8 '16 at 5:21
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Introduction

Soviet economic history is an interesting and complicated subject, especially since most information was always classified and any unbiased study was likely to land the researcher in prison (or worse, depending on the time period -- see footnote 1).

However, there are several major periods:

  1. Civil War 1917-1921: the population is treated as slaves of the state and supplied a subsistence ration, as the communist government fights against the "white movement". Ended as the white movements petered our and were replaced by popular uprisings stimulated by hunger.
  2. New Economic Policy 1921-1929: small private enterprise coexists with the state monopoly on industry and banking as the communists engage in the internecine struggle for power. Ended as victorious Stalin decided to fast-track industrialization at the expense of the agricultural sector in preparation for the "world revolution" (as the propaganda called his plans for the European conquest / restoration of the Russian imperial borders).
  3. (Pre-)War Economy 1929-1986: state monopoly on all discernible economic activity. Ended with the economic bankruptcy as the country was unable to afford a credible counter to SDI.
  4. Gorbachev Reforms 1986-1991: more and more radical economic reforms intended to stimulate private economic activity result in uncontrolled inflation.

My answers are related to the 3rd period. This is a long time, encompassing pre-WW2, WW2, post-WW2 recovery, arms/space race &c.

The main defining factor of the economic life during this period was that the country was either fighting a war, of actively preparing for an imminent war right around the corner.

The immanent inefficiencies of the Soviet system were observed by the leadership and several attempts at reform were made. They changed little from the economic POV.

Worker's compensation

Workers were paid a piece work or hourly wage which also depended on the worker's skill category and region (i.e., if you work in a remote region, you earn more; this is determined by Moscow, not the local administration, of course).

Engineers were paid a fixed salary which also depended on rank and region.

There were quite steep increases for an advanced degree: usually an engineer would make about half of what a worker would make (yes, an entry-level salary for an engineer was, say ~120 r/mon, for a worker 200-300 r/mon), earning a Candidate degree (= PhD) would up the salary by 50-100%, and a Doctorate (= Professor) would be making another 100% more.

There were various national prizes which were quite sizable.

Limitations on Possessions

There were no official limits. However, if your neighbor thought that you have more than you can legitimately earn with your occupation, they were very likely to report you to ОБХСС and you would have to explain how you came up by the car you own but obviously cannot afford (note the presumption of guilt) because you are not a General or a Professor (or famous singer or artist or writer - these were really well off).

Thus people would often register their cars (largely unavailable to the general population - see footnote 2) and country homes in the names of their relatives.

The extreme case was jailing people who did not engage in a state-sanctioned occupation.

All land was owned by the state. To own a country home, one had to join a special coop (and it was not easy either).

Owning and especially trading foreign currency was illegal (the few lucky ones who worked abroad had to exchange foreign currency for special "checks" which could be used to buy rare stuff at beryozka).

How would one create a new business or company

One would not, unless one is longing for a prison camp spot. "Business activity" was a felony.

The most you could do after НЭП was over in 1929 was to engage in individual work like fixing shoes or sewing dresses for private customers, or private tutoring (there were minor variations with time, but "small stuff" was rarely prosecuted -- although Iosif Begun was jailed for "social parasitism" while he was earning his living by Hebrew tutoring). Any attempt to hire an employee (as opposed to house help or babysitter) was a major felony. This does not mean that no one did it (cf. Цеховик, Павленко), but those who were caught went to jail. There were even show trials for economic crimes.

There was a "cooperation" loophole (technically - but not in fact - "kolhoz" was a "cooperative"), but it was never used until Gorbachev (because it was a loophole, intended to catch people trying to hire workers).

Impact

According to some estimates, the Soviet "shadow economy" employed ~10% of national workforce and supplied 30% of workers' income. This is a testament to both monumental inefficiency of the "public sector" and its focus on military production. And, yes, this also means that ~10% of workforce was liable for prosecution for economic crimes (cf. Three Felonies a Day committed by each American).

Footnotes

1

Here is a joke from 1970ies - early 80ies:

A college student comes out from an oral exam on Political Economy. He is shining with bliss.

Classmates ask him: "What is your grade?"

He replies: "Fail!"

"Then what are you so happy about?!"

"My buddy was arrested right there!!"

2

A person has been waiting in a line to buy a car. Finally he receives a postcard telling him that the car for him has been placed on the production plans and he will receive it in 4 years, 3 months and 5 days, and he should plan accordingly - to come to the store to collect the car on that day.

The guy frantically calls the store and asks whether he should come in the morning or afternoon.

The clerk at the store asks why does it matter.

The lucky future car owner answers: they have scheduled a visit from the plumber on that exact day in the morning.

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    There is another joke. A man comes to his friend, a Party member, and asks if he could find his 18 year old son a good job. The Party member suggests a modest post making 50 rubles a month. "Don't be ridiculous," says the first man, "he doesn't have the education to make so little!" – SPavel Dec 7 '16 at 19:53
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    One more thing: Some (actually, many) people did engage in (necessarily illegal) business activity, some of these went to jail, some even were executed. – Moishe Kohan Dec 7 '16 at 23:19
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    @Schwern: an engineer indeed made less than a worker (see SPavel's joke above) – sds Dec 8 '16 at 2:39
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    Very likely you are looking for this – Felix Goldberg Dec 8 '16 at 3:48
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    @Anixx: your stalinist propaganda is getting repetitive. – sds Dec 8 '16 at 14:44
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Soviet Union had a long history, and the answers depend on the period. I mostly address 1960-1980.

  1. There was no such thing as (legal) business. A person could not own a company. You could produce something for sale (to be an artisan) but you could not hire anyone. Hired labor was called "exploitation" and the only legal employers were state enterprises, collective farms and cooperatives.

Buying and reselling anything was called "speculation" and was punished by fines and prison terms. In the 1970s you could face death penalty for currency exchange, for example.

(I am not talking about illegal businesses which were quite widespread since 1980s but were prosecuted.)

  1. Salary varied depending on the job, profession, and qualification. For example, in early 1960th the average salary was 30 roubles per month. But there were people who made 500 roubles. I mean legally, as a salary. The highest payed categories were academics and top administrators.

Royalties existed. The (officially) richest people were artists, and popular authors.

  1. There was no "limitation on possession of money". But there was a notion of "not earned income". People could be routinely inquired about the source of their possessions. If you could not demonstrate a legitimate source you could be prosecuted and your property confiscated. As I said on the later stages, illegal business was widespread. A usual story was that your neighbor would denounce you that "you live above your means", you would be questioned until you reveal the source of your possessions and if illegal, you would be prosecuted.
  • "If you could not demonstrate a legitimate source you could be prosecuted and your property confiscated." And we're seeing such laws coming into effect in the west now, under the excuse of "stripping illicit gains from criminals"... – jwenting Jan 26 '17 at 8:55
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How were workers compensated, was wage equal everywhere? If not - what affected the variations?

The wage was not equal everywhere. If we speak about 1961-1986 period, the situation was as follows.

  • First, the majority of employees were salaried, not on wage.

  • Good performance, meeting plan targets and producing over the plan, improvement suggestions would be rewarded, not meeting plan target or producing wreckage would be punished.

  • Skilled manual labor usually would be paid more than basic white-collar labor. The best paid worker job was possibly being a miner. As has been pointed out, an engineer would usually make less than a worker.

  • There were big regional variations, people in the cold, unpopulated regions like North and Far East would be paid more.

  • Under the same conditions, people working in military-industrial complex would be paid more than in civil enterprises.

What were the limitations of possession of money and/or assets? How were they enforced?

There were no limitations on possession of money. But if you were super-wealthy you could face pressure to donate the money to a charity such as Peace Foundation etc under the treat of damaging your carrier.

Regarding real estate there were strict limitations. You should not own real estate where you did not live (with an exception of a summer house and garage). If you inherited an year-round house you had 1 year to sell it off or you should move there and abandon your current place.

The majority of apartments in cities were state-owned. Yet, you could purchase a flat in a cooperative condo. In such condos all the flats belonged to the cooperative and you owned a share in it. If the owner would die, the condo members would vote whether to give the flat to the heirs or to repay the share in money.

Regarding summer houses, the situation was similar. There were partnerships who owned the houses in an area and you owned a share in the partnership. Under Khrushchev there were strict limitations on the design and other features of summer houses. Under Stalin the design was free and also one could own a summer house personally, without a partnership.

Regarding garages in the urban area the situation was similar, there were partnerships where you owned a share.

How would one create a new business or company? Could you own a company?

Under Stalin you could, such companies were called artels. Under Khrushchev until the mid-1980s you could not.

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    Wonderful how you never fail to point out the greater freedom and opportunities people used to enjoy under Stalin's rule. – Felix Goldberg Dec 8 '16 at 5:53
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    @Felix Goldberg well, it is in fact the case: economic freedom under Stalin was in fact greater than under Khrushchev. – Anixx Dec 8 '16 at 5:56
  • I had upvoted this answer in the past and will let my vote stand because you make some good points. However, the part about the supposed freedoms under Stalin is one big falsehood. In particular, artels were emphatically not companies. Making a profit was illegal under Stalin so no one could form a company in the true sense. Check out here if you don't believe me. – Felix Goldberg Jan 27 '17 at 17:15
1

I'm going to add three short anecdotal stories told directly to me by someone who lived a long time in the USSR. I am going to tell these stories as much as I can in her voice. These are her personal stories of her life under Soviet rule. This woman was a retired professor so she was respected and considered more fortunate than most in the grand scheme. To be fair, this was in Romania which suffered under Ceaușescu -- and so in some ways represents the worst examples of life in the USSR -- but also note that these stories are also fairly recent (circa mid-late 1990's) after the official collapse of the USSR (the Yeltsin era), a period that supposedly represented new economics but in reality many of the old systems were still in use, especially in communities located away from the urban centers.

These stories go to how economics were enforced in subtle ways...

Food Supply

In the small town where she lived there was a food store. Each person was given a specific day of the week when you would go to the store. On that day you would go early in the morning (before sunrise if you were smart) and wait in line. When it was your turn you went inside and you were told what was available and asked what you needed. While the store had many shelves they were mostly empty but it did not matter because your order was filled for you and put into a bundle. You were told how much to pay, given your bundle, and sent on your way. Afterwards you left the store and headed home.

You would get home and open your bundle and then try and figure how you would make it last for the week. Rice was a good thing for making ends meet and you might get 2 kilos (~ 4.5 pounds) of rice in your bundle, but you had to open the package and carefully sift the rice to remove the small twigs and pebbles that were always there. A 2 kilo bag usually yielded about 1.5 kilos of rice afterwards.

Sometimes on your way home neighbors would greet you and ask how your "shopping" had gone. Now just because you asked for something did not mean you got what you needed, because often the store did not have everything you needed, but the important thing was that you always were satisfied -- even if you were not -- because to be unsatisfied with the food distribution was disloyalty and that was a bad thing. So when asked about your shopping you always answered "very good". There were people who sometimes were unhappy with the meager bundles they had and sometimes they forgot themselves and expressed their unhappiness. Under Ceaușescu being unhappy with what the State provided was disloyalty. Knowing someone was disloyal and not reporting it was also disloyal. And disloyal people had a strange habit of disappearing. Even after Ceaușescu was gone people would still ask how shopping went and you would still always answer "very good" just to be safe.

Healthcare

We had excellent hospitals and doctors but if you needed emergency help and called for an ambulance the first question they would ask was not "Where are you?" or "What is the problem?" ... the first question was "How old is the patient?" and then they would ask the questions you would expect. When you retire you are considered non-productive and therefor a drain on society. So when you need medical care you are de-prioritized. If the answer to the first question is "25" the ambulance will arrive promptly, but if the answer is "60" it might be a couple of hours sometimes. It sounds cruel -- and it is -- but once you stopped being productive the State wished you a good retirement but they also expected to live only a short while longer. Of course living as long as possible was the one safe way to defy the State.

Exit Visa

Her children had been living in other parts of the USSR and during the Gorbachev era they had come to the United States and become citizens. So when she retired they asked her to come and live with them. At first she refused but eventually they convinced her and she filed a request to emigrate. The following are the steps she had to take in order to get approved:

  1. She has one "luxury", an old small car that had become hers because she was a professor. As a retiree she was able to keep the car and also had a small fixed pension and of course the apartment she lived in. In order to get her exit visa she was required to "restore and return" to the State what she had been given by the State. This meant she had to fix up the car, including a tune up and new tires, and clean and paint the apartment.

  2. She was allowed one suitcase for her exit and only clothes and necessary items (medicines, toiletries) were permitted, not even personal pictures would be allowed. She even had written a textbook that was used at the college she had taught at and she was not allowed to take that either. Before she left she visited many friends and even some former students. To each of them she gifted her personal possessions. Better to give these to people she cared about then to let the State take it all.

Conclusion

As I mentioned, because she was in Romania these stories are probably not typical of the USSR as a whole, but you can see the pattern of economic controls through oppression. Restrictive supply & demand, rationed healthcare based on age, and the ever present "What the State gives, the State can take away."

She says that the purchase cost of things was much lower there, but on the plus side now that she is living in the USA she no longer has to filter her rice for twigs. :)

  • I do not doubt the veracity of the stories but two points must be corrected: (i) Romania was a separate country, not part of the Soviet Union. (ii) No way this dates to the mid 1990s, after the fall of Ceaușescu and the end of Communism. More like the 1980s or the 1970s. It's either a typo or you misheard or misunderstood your source. – Felix Goldberg Jan 27 '17 at 16:57
  • @FelixGoldberg This person left Romania circa 1994-95. The first two stories predate the fall of Ceaușescu but you have to remember that privatization did not even start until 1992 and reforms in the economic infrastructure were slow to disseminate into the more remote areas. Add to this that old habits (like saying "very good" on shopping days) continued long after the problems with food distribution were resolved. The exit visa story was absolutely after the regime change. – O.M.Y. Jan 27 '17 at 21:42

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