The Soviet Income Revolution

Murray Yanowitch

doi:10.2307/2492565

The Soviet Income Revolution

Published online by Cambridge University Press: 27 January 2017

Murray Yanowitch

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Murray Yanowitch*: Affiliation:
Hofstra University

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A number of studies of income distribution have suggested that income inequality in the United States showed some tendency to decline during the 1930's and the war years. Although the extent and timing of the decline may be in dispute among specialists in this area, and some recent studies suggest that no significant changes in income shares have occurred since 1944, the American Income Revolution has nonetheless been widely accepted and acclaimed. All the more reason, it would seem, that studies of changes in income inequality in Soviet Russia should prove of great interest. If income inequality has been reduced in the world's major capitalist economy, what has been happening to income distribution in the Soviet Union?

Type: Articles
Information: Slavic Review , Volume 22 , Issue 4 , December 1963 , pp. 683 - 697

DOI: https://doi.org/10.2307/2492565 [Opens in a new window]
Copyright: Copyright © Association for Slavic, East European, and Eurasian Studies. 1963

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1 For a good summary and restatement o£ the findings which suggested the decline in inequality, see Selma Goldsmith, F, “Changes in the Size Distribution of Income,” American Economic Review, XLVII, No. 2 (May, 1957), 504–18Google Scholar. An effective presentation of a dissenting view appears in Gabriel, Kolko, Wealth and Power in America (New York, 1962)Google Scholar. Recent evidence of the stability of income shares since the end of the war is presented by Herman P. Miller of the Bureau of the Census in The New York Times Magazine, Nov. II, 1962.

2 Thus in (Moscow, 1951), p. 60, it was identified as a policy of “Trotskyites, Zinovievites, Bukharinites and other enemies of the people….“

3 One such example is the sociologist S. M. Lipset in Socialist Call, Summer, 1961, p. 12. However, he cites Italy as an exception.

4 , Feb. 18, 1956.

5 All ruble figures in this paper are given in terms of the new rubles introduced in January, 1961. The original figures here were 270-350 rubles and 500-600 rubles.

6 Program of the Communist Party of the Soviet Union Adopted by the 22nd Congress of the CPSU, October, 1961 (New York, 1961), p. 95; hereafter cited as Party Program.

7 Incomes of collective farmers are scheduled to rise more rapidly than those of workers (ibid., p. 96).

8 The ninth decile wage is the wage which was exceeded by the top 10 per cent of the workers; the first decile wage is the wage which the bottom 10 per cent failed to reach. The third and first quartiles may be defined similarly for the corresponding 25 per cent of workers. Changes in these ratios reflect not only changes in the relative wages of particular occupations but also changes in the relative importance of the various occupations. Hence, these ratios are more properly designated as measures of wage variation rather than of wage differentiation. See Abram, Bergson, The Structure of Soviet Wages (Cambridge, Mass., 1946), p. 55.Google Scholar

9 It is possible, reading from a Soviet chart, to derive rough estimates of the share of wage income received by different proportions of Soviet workers and on this basis to construct Lorenz curves of wage distribution for 1934, 1956, and 1959 (, No. 10, 1961, p. 24). The chart shows the percentage of workers on the vertical axis and mid-points of income classes on the horizontal axis, with the mid-points expressed as percentages of the median wage. It is our judgment, however, that the values that may be read from this chart are of dubious value for observing changes in the size distribution of Soviet wage incomes. Portions of the chart are barely distinguishable, and there is particular uncertainty about the low- and high-income extremes. The Lorenz curves that may be derived from this chart (at least in our reading of the values) appear to be essentially the same for 1934, 1956, and 1959. Whether this reflects the actual state of affairs or the roughness of the chart (or our reading of it), we prefer to leave for future study. We may note, however, that the income shares estimated from the chart for 1934 exhibit less inequality than was suggested by Bergson's study of Soviet wages in that year (Bergson, op. cit., p. 123): Cumulative percentage of workers 10 20 30 40 50 60 70 80 90 100 Cumulative percentage of wage bill (Bergson) … 3.4 8.7 15.0 22.3 30.5 39.9 50.5 62.7 77.7 100.0 Cumulative percentage of wage bill (Soviet chart).. 4.8 10.2 17.5 25.1 34.0 44.2 55.6 68.8 82.0 100.0 For 1956 and 1959 the estimated shares of the wage bill differ altogether insignificantly from those read from the Soviet chart for 1934.

10 op. cit., pp. 21, 25. The decile and quartile ratios given here for 1934 are below those which may be derived from Bergson's study [op. cit., p. 128). The Bergson data imply decile and quartile ratios of 374 and 194 respectively, thus suggesting greater wage dispersion in 1934 than that indicated by the figures presented here (317 for the decile ratio and 182 for the quartile ratio). The discrepancies may possibly be explained by differences in coverage and Bergson's need to rely on interpolation of the required values.

11 It should be noted, however, that the peak in wage inequality probably occurred before 1956. Wage rate differentials had been reduced after the war. Most o£ the increase personbetween 1934 and 1956 in the ratios shown above may reflect the widening of wage differentials prior to the war.

12 , No. 12, 1961, p. 32.

13 Between 1950 and 1956 wages in the most highly paid sectors (coal, oil, steel) increased less than average earnings in industry as a whole ( op. cit., p. 24).

14 (Moscow, 1961), p. 65.

15 (Moscow, 1961), p. 98.

16 No. 10, 1961, p. 31. While the figures through 1955 clearly apply to earnings, including premiums, there may be some doubt as to the figure for 1960 cited in the latter source. The 1960 figure is referred to as “the relationship between average wages of workers and the average rate (oklad) of engineering-technical personnel.” However, the same terminology is also used here for a 1932 figure which other sources make clear applies to earnings. In any case, the trend from 1932 to 1955 revealed in the figures above remains unaffected.

17 op. cit., p. 41.

18 op. cit., p. 38.

19 , op. cit., p. 228.

20 (Moscow, 1959), p. 156.

21 op. cit., p. 187; op. cit., p. 24.

22 Thus the average earnings of coal miners in the Ukraine in 1959 were about 260 per cent o£ t h e earnings of workers in t h e food industry, 250 p e r cent of those in light industry, and 220 per cent of those in the forestry, paper, and woodworking industries ( op. cit., p. 197).

23 (Moscow, 1961), p. 86. The data for 1934 are in Bergson, op. cit., p. 123.

24 op. cit., p. 22.

25 , pp. 85-86. The average wage figures above are estimated from data in (Moscow, 1960), p. 136.

26 I t is hazardous b u t tempting to compare Soviet income inequality with that prevailing in the United States. We may simply indicate what some highly provisional findings reveal. Among workers t h e r a t i o of t h e t h i r d to t h e first quartile (Q3/Q1) of a wage distribution covering about two-fifths of non-farm wage earners in the United States in 1956 was 1.37; Paul T. Homan, Albert G. Hart, and Arnold W. Sametz, The Economic Order (New York, 1958), p. 285. As noted above, the corresponding Soviet figures in recent years have been in the neighborhood of 1.85. Although there are serious questions concerning the comparability of the data, the direction in which these figures point is unmistakablewage dispersion among workers is greater in Soviet Russia than in the United States. However, comparisons of income inequality for the whole population of the two countries point in the opposite direction. In the United States the share of money income received by the highest 10 per cent of spending units in recent years has been approximately thirty times that received by the lowest 10 per cent (U.S. Bureau of the Census, Statistical Abstract of the United States, 1961, p. 315). The Soviet ratio of incomes—money and nonmoney— of the top 10 per cent of families to the bottom 10 per cent (4.75: 1) is, of course, not comparable to these United States figures. But it seems quite unlikely that the necessary adjustments to the Soviet figures would raise the Soviet ratio to the United States level. The chief adjustments would require inclusion of the farm population's income and elimination of all non-money incomes. The latter adjustment alone would raise the Soviet ratio to no more than 6: 1 or 7: 1 (, op. cit., p. 94).