The crop failures slowed down the economic growth rate and greatly increased the foreign debt because the government, to avert famine, bought large amounts of wheat from the United States and Canada. The government took steps to combat the problem by paying a monthly wage to farmers; offering new incentives for superior production; adopting more efficient management techniques; and increasing the use of fertilizer, labour-saving machinery, and irrigation. A long-term policy involved reactivating a plan originated by Khrushchev to evacuate the people of many small villages and resettle them in large farming centres. Such measures, combined with good weather, resulted in record harvests in 1973, 1974, and 1976. Irrigation and reforestation made even the marginal lands of Kazakhstan remarkably productive. Nevertheless, agriculture remained a serious problem.

Industry

Rapid industrialization had occurred in the Soviet Union under Stalin's Five-year plans, eventually turning the country into the world's second industrial and military power. However, production of consumer goods had long lagged. Total industrial production in 1957 was reported as 33 times that of 1913, but the increase in consumer items was only 13 times higher, compared with an increase of 74 times in heavy industries. The Khrushchev regime promised an increase in consumer goods, but accomplished little. The regional industrial councils were consolidated in 1957 and again in 1962, and industrial enterprises were combined. By 1964 attention centred on the fertilizer, plastics, and rubber industries.

Management

Yevsey Liberman and other Soviet economists had advocated the introduction of some capitalist features into the framework of Marxism as a means of increasing industrial production, particularly recognizing the profit motive as a stimulus to plant efficiency. Kosygin, Brezhnev, and other officials accepted these ideas, admitting that management methods had fallen behind productive capacities. The correct principle, they stated, was combining centralized general direction with cost accounting, production based on orders, wage incentives, and other capitalist practices. In a pilot project begun in July 1965, 400 clothing and shoe factories based their production on orders received rather than on quotas set by the government. In October the Supreme Soviet adopted legislation applying this policy to industries, farms, transport, construction, and communications. Working capital was to be assigned to each enterprise, and local management was to determine its use.