Encyclopedia of Russian History

ROGER KANGAS

ENCYCLOPEDIA OF RUSSIAN HISTORY

1629

VALUE SUBTRACTION

Value subtraction, or negative value added, occurs when resources and other inputs used in the production process generate output with a lower value than that of the original resources and inputs. The management of Soviet state-owned enterprises, focusing on fulfilling plan targets in order to receive a bonus, tended to fulfill the main plan target, quantity of output, with little regard for cost or efficiency considerations. At the same time, enterprises faced centrally determined prices for both the input used and the output produced. Soviet centrally determined prices were not based upon supply and demand conditions in either the domestic or global market, nor were they adjusted in response to obvious surplus or shortage conditions. Consequently, neither the prices nor the corresponding profits or losses generated in the planning process provided meaningful information to Soviet firms in terms of whether to expand or contract their operations. The primary obligation of each firm was to fulfill annual output plan targets.

Value subtraction characterized the operation and performance of Soviet firms when their inputs and output were valued at world market prices. World market prices were more accurate reflections of the economic cost of producing an item than Soviet centrally determined prices, because they incorporated marginal rather than average costs of production, and because they adjusted to surplus and shortage conditions generated by ever-changing actions of buyers and sellers. Typically, Soviet prices were well below world market prices for the majority of resources and other inputs used in the production process. Consequently, when world market prices were applied by Western researchers and analysts to the actual resources and inputs used in the Soviet production process, the newly calculated costs of production were much higher. These higher costs were not offset by applying world market prices to the produced output, however, because the technological level of Soviet enterprises and abject quality assessments kept Soviet output valuations low in comparison to world standards. The existence of value subtraction, or negative value added, was confirmed by Soviet economists and analysts when glasnost and pere-stroika in the late 1980s allowed more frank and detailed discussions of actual conditions in the Soviet economy.

1631

VARANGIAN

See also: HARD BUDGET CONSTRAINTS; RATCHET EFFECT; VIRTUAL ECONOMY

SUSAN J. LINZ VARANGIAN See VIKINGS.

VARENNIKOV, VALENTIN IVANOVICH

(b.1923), commander-in-chief of the Soviet Ground Forces; deputy minister of defense; General of the Army; Hero of the Soviet Union; member of the State Duma.

Valentin Krasnodar was born on December 13, 1923, in Krasnodar in the Kuban region of South Russia. He joined the Red Army in 1941 as an officer cadet and was commissioned in 1942. He took part in the defense of Stalingrad as an artillery officer and served in that capacity through the war to the assault on Berlin. Varennikov was a stand-bearer at the Victory Parade in Red Square in 1945. After the war he commanded artillery and infantry units. In 1954 he graduated from the Frunze Military Academy.

Varennikov advanced in the army leadership and graduated from the Voroshilov Military Academy of the General Staff in 1967. During the late 1960s and early 1970s he commanded an army and served as deputy commander of the Soviet Group of Forces in Germany and as commander of the Carpathian Military District. In 1979 he was head of the Operations Directorate of the General Staff, which planned the military intervention in Afghanistan. In 1984 he assumed the post of deputy chief of the Soviet General Staff with responsibility for direct oversight of operations in Afghanistan; he later oversaw the withdrawal of Soviet forces.

In January 1989 Varennikov was made com-mandor of Soviet Ground Forces. In August 1991 he was an active participant in the conspiracy to remove Mikhail Gorbachev and prevent the proclamation of a new union treaty. During the attempted coup Varennikov was in Kiev. Arrested and jailed when the coup collapsed, Varennikov refused to accept an amnesty when it was offered in March 1994. Later that year, the Military Collegium of the Supreme Court ruled that he was not guilty of treason. In December 1995 he ran for election to the State Duma as a candidate from the Communist Party and won. He won re-election in 2000 and serves as chairman of the parliamentary Committee on Veterans’ Affairs. See also: AUGUST 1991 PUTSCH; MILITARY, SOVIET AND POST-SOVIET

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