Five-Year Plan
Stalin's instrument for turning a peasant country into an industrial power in a decade, which worked, and which cost millions of lives to do it.
In 1931 Stalin told an audience of industrial managers that the Soviet Union was fifty to a hundred years behind the advanced countries, and that it had to close that gap in ten years or be crushed. Ten years later, almost to the month, Germany invaded. Whatever else is said about the Five-Year Plans, that particular prediction was correct, and the tanks that stopped the Wehrmacht were built in factories that did not exist when he said it.
What a plan actually was
The first Five-Year Plan ran from 1928 and was declared complete in four years, which tells you most of what you need to know about the statistics. The mechanism was this: Gosplan, the state planning committee, set physical output targets, tons of steel, tons of coal, numbers of tractors, for the whole economy; those targets were disaggregated down to individual factories; and enterprise directors were rewarded or arrested according to whether they met them.
Prices did not allocate anything. There was no market signal telling a factory what to make or how much an input was worth. There was a number from Moscow and a deadline.
The financing came from agriculture. Collectivization forced peasants into state and collective farms, took the grain, and exported it to buy foreign machinery and hire foreign engineers, many of them American and German. The Ford Motor Company helped build the automobile plant at Gorky; the Magnitogorsk steel complex was modeled on Gary, Indiana. The price of that grain extraction was famine: the Holodomor in Ukraine and adjacent famines in Kazakhstan and the Volga killed several million people in 1932 and 1933.
Labor came partly from freed-up peasants moving to cities and partly from the Gulag, which supplied unpaid workers to canals, mines, and railways in places where no one would go for wages.
What it achieved, honestly
The output figures are inflated but the transformation is real. Between 1928 and 1940 Soviet steel, coal, and electricity production rose several-fold, whole industrial cities appeared in the Urals and Siberia, and a rural society became a substantially urban one within a single generation. The Soviet Union avoided the Great Depression entirely, which impressed a great many observers abroad at exactly the moment Western capitalism appeared to have failed.
The war settled the argument in Moscow's favor. Having heavy industry east of the Urals, deliberately located out of reach, is why factories could be evacuated in 1941 and why tank production outran Germany's from 1942.
What it could not do
The system was brilliant at building a first steel mill and hopeless at improving the tenth. Targets in physical units produce exactly what is measured and nothing else: quotas set in tons yield unnecessarily heavy goods, quotas set in units yield shoddy ones, and nothing in the incentive structure rewards a manager for innovating, since a good year only raises next year's target.
There was also no feedback about what anyone wanted. Consumer goods were the permanent residual, cut whenever heavy industry or defense needed more, which is why a superpower that could build an ICBM could not reliably supply shoes.
Later plans got progressively less impressive as the easy gains from moving peasants into factories ran out, and by the 1970s Soviet growth had stalled into what became known as the era of stagnation.
The echo
The model was exported wholesale. China ran its first Five-Year Plan from 1953 on Soviet advice and Soviet engineers, and then attempted to accelerate it with the Great Leap Forward, which produced a famine worse than the Soviet one. India adopted five-year plans without the coercion, and much of the postcolonial world built planning commissions on the assumption that this was simply what a developing state did.
The lasting verdict is narrower than either side of the Cold War wanted. Command planning can mobilize a backward economy for a small number of specified physical goals, at enormous human cost, faster than markets can. It cannot run a complex economy, because a complex economy is a problem of information rather than of will. China's own answer after 1978 was to keep the plan document, which it still publishes, and quietly abandon the mechanism.