The GOELRO plan for nationwide electrification was approved by the Eighth All-Russian Congress of Soviets. It became an early model for trying to coordinate economic development through an all-state plan, influencing later planning work in Gosplan.
The Council of People’s Commissars (Sovnarkom) created the State General Planning Commission, soon known as Gosplan. At first it served mainly as an advisory body, tasked with developing a unified economic plan and monitoring its implementation.
The Soviet government formally accepted the GOELRO plan, reinforcing electrification as a state priority. This strengthened the idea that major resource decisions could be made through centralized planning rather than markets.
After the USSR was formed, planning was reorganized at the union level so that national economic targets could be set and coordinated across republics. This shift laid the institutional foundation for broader, more detailed planning methods in later years.
With the First Five-Year Plan, Gosplan moved from forecasting and “control figures” to directing a binding national plan. The plan’s push for rapid industrialization created a need for tools that could match inputs and outputs across industries in physical terms.
During the early Five-Year Plan and collectivization era, Soviet planners increasingly relied on material balances—tables that tried to equate supplies and demands for key commodities in physical units (like tons of steel) rather than by prices. This method aimed to ensure that planned outputs were feasible by checking whether required inputs would be available.
Soviet statistical and planning institutions compiled detailed materials to map inter-industry relationships in the late 1920s economy. Circulated internally, this work reflected the growing effort to make planning more systematic by quantifying how sectors depended on each other for inputs.
Khrushchev’s 1957 reform replaced many centralized industrial ministries with regional economic councils (sovnarkhozy). The change aimed to reduce Moscow bottlenecks, but it also complicated the coordination tasks that material-balance planning depended on, increasing overlap and disputes over responsibility.
Economist J. M. Montias analyzed material-balance planning as a distinctive planning mechanism in “Soviet-type” economies. The study helped clarify how plans were repeatedly revised through negotiations and adjustments until key commodity balances were (at least on paper) aligned.
Viktor Glushkov proposed OGAS, a nationwide computer network intended to gather economic information and support planning decisions. It reflected a growing belief that the paper-based material-balance system could not keep up with the scale and complexity of the economy without automation.
As part of mid-1960s reforms, the USSR reactivated Gossnab to handle large parts of wholesale allocation of equipment and industrial inputs. This institutional change separated some day-to-day supply assignments from Gosplan’s higher-level balancing, showing how material-balance planning relied on specialized distribution agencies.
In September 1965, the leadership approved reforms that emphasized profitability and sales as key indicators for enterprises, alongside plan targets. The reform did not eliminate material balances, but it tried to improve performance by mixing administrative allocation with stronger enterprise-level incentives.
Although OGAS began as a major proposal to modernize planning, it did not receive the necessary funding by 1970. This outcome signaled the difficulty of replacing or transforming established material-balance institutions and routines at the all-Union scale.
By the early 1970s, Soviet leaders had not adopted a fully networked, computerized alternative to the existing planning approach. Material balances remained the practical core of planning—powerful for pushing priority outputs, but widely criticized for chronic shortages, rigid assumptions, and weak responsiveness to changing needs.
Material-Balance Planning in the USSR (1920s–1970s)